Sir William Baillie and Others, (Trustees of the late David Clyne, S. S. C.,) - Sir John Campbel - Tinney v. The Edinburgh Oil Gas Light Company - Dr. Lushingto - H. Bruce [1835] UKHL 2_SM_243

UKHL
Sir William Baillie and Others, (Trustees of the late David Clyne, S. S. C.,) - Sir John Campbel - Tinney v. The Edinburgh Oil Gas Light Company - Dr. Lushingto - H. Bruce
[1835] UKHL 2_SM_243 · 1835-08-27
made the recovery of the sum awarded to him conditional on his doing so.A company brought an action against one of its partners for two calls upon his stock, and he raised a counter action of damages against the company, for the market price of his stock, as at a certain date, in respect the company had without his consent abandoned their business, and united themselves with another company; and these actions were referred to a judicial referee, who found that the company was entitled to decree for the calls, and that the partner was entitled to decree for a certain sum as the price of his shares, which sum (under deduction of the calls) he was entitled to recover on transferring his shares of stock to the company. Held (reversing the judgment of the Court of Session), 1. That in the action at the instance of the company the award of the referee could not be confirmed except as to one of the calls, in respect that both the calls proposed to be decerned for had been made at one time, whereas by the statute incorporating the company a month ought to have elapsed between them. 2. That in the action at the instance of the partner against the company the award was inconclusive, inasmuch as it did not bind the partner to convey his shares to the company, but only

Footnote

* The judgment was pronounced on 17th July, but was omitted to be reported under that date.

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Question, Whether an error in law forms a good objection to a decree arbitral?

Subject_ Appeal. —

Circumstances in which a judgment of the House, embodying an agreement of parties, was recalled.The Edinburgh Oil Gas Light Company was established by statute in the year 1824. At the formation of the company the late Mr. Clyne, solicitor in the Supreme Courts (who was represented by the appellants), became a proprietor of fifty-two shares of the capital stock.By the 52d section of the statute it is enacted, “That the committee of management shall have full power and authority from time to time, at any of their meetings aforesaid, to make such call or calls for money from the several subscribers to and proprietors of the said undertaking, in order to defray the expenses of or of carrying on the same, as they shall from time to time find wanting and necessary for these purposes, until the sums subscribed are fully paid; but no such call shall exceed the sum of 10 l . per centum for or in respect of every share in the said undertaking, and so that no such calls be made but at the distance of one calendar month at least from each other, and so that fourteen days previous notice at least shall be given of every such call by a circular letter to each proprietor, transmitted through the General Post Office of Edinburgh, or by advertisement or otherwise, as the committee of management may direct.”By the 71st section it is further enacted, That “nothing in this act shall extend or be construed

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Towards the end of the year 1825 the committee of management resolved to make two calls upon the proprietors of 10 per cent, each; and accordingly, on the 12th December of that year, the clerk of the company addressed a circular letter to each of the proprietors, intimating that a fifth call of 2 l . 10 s . per share on the capital stock of the company was payable on the 10th of January 1826, and a sixth call of 2 l . 10 s . per share on the stock on the 13th of February following. The sum due upon Mr. Clyne's share of the stock of the company, under the first of these calls, was 130 l ., and under the second a similar sum of 130 l ., amounting; in all to 260 l . These calls were paid by all the other proprietors, but no part was paid by Mr. Clyne.In the course of the autumn of 1826 it was ascertained, for the first time, by the committee of management, that the manufacture of gas from oil was to be extremely unprofitable to those concerned in it. For the purpose of communicating this intelligence to the proprietors, and obtaining their sentiments and instructions as to their ulterior proceedings, the directors caused a special general meeting of the company to be convened, in terms of the statute, by public advertisement in the newspapers, and by circular letters addressed to every proprietor upon the 4th of November 1826. At this meeting (which was not attended by Mr. Clyne) the proprietors, after hearing a report from the directors,

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After some time, and on considering another report by the directors, the proprietors resolved, at a meeting held on the 22d of January 1828, “again to apply to Parliament for power to manufacture coal gas,” and a committee was appointed to carry this resolution into effect. While the directors were engaged with the necessary preparation for introducing a bill into Parliament they were induced to enter into a treaty with the Edinburgh Coal Gas Company, which, after some communing, resulted in the following minute of agreement, dated 8th March 1828, “At a meeting of the sub-committees of the Coal and Oil Gas Companies, it is agreed that the Oil Gas Company shall make over to the Coal Gas Company their whole property of every description, real and personal, excepting the sums due for calls made or to be made upon their proprietors and accounts due by their customers, and that free of

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(Signed) Walter Scott, Chairman of the Edinburgh Oil Gas Light Company.

W. Trotter, Governor of the Edinburgh Gas Light Company.”

This agreement was reported by the directors to a special general meeting of the proprietors of the Edinburgh Oil Gas Light Company, which was held on the 27th of March 1828, when it was unanimously resolved:—
“That the proprietors of the Oil Gas Company do confirm the agreement made with the Edinburgh Gas Light Company, and also do remit to the directors, with full power to them, or to any committee appointed by them, to take all measures and to sign all deeds necessary for carrying the same into full execution.”
Mr. Clyne was not present at this meeting, but it was alleged that the resolution was intimated to him, and to all the proprietors, by a circular letter dated 1st April 1828, and signed by the manager. In consequence of this resolution the directors concluded the agreement with the Coal Gas Company on the terms above set forth. The Coal Gas Company from that period commenced supplying the customers of the Edinburgh Oil Gas Light Company with coal gas, and in particular it was alleged they had since furnished this gas to Mr. Clyne, who had previously been a consumer of oil gas.In January 1827 the directors of the Oil Gas Company raised an action against Mr. Clyne for payment of the above two calls of 130 l . sterling each, with interest till paid. In defence against this action Mr. Clyne pleaded:—1st, That the calls were not made for the necessary purposes authorized by the statute, but were

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While this action was in dependence, Mr. Clyne, in October 1829, raised an action against the Oil Gas Company for 1,183 l ., as the market price of his shares of the stock as at 21st February 1825, on the ground that the company had, without his consent, abandoned the manufacture of oil gas, and transferred their stock to the Coal Gas Company, on receiving in lieu thereof certain shares of the stock of the Coal Gas Company.In support of this action, Mr. Clyne maintained the following pleas:1. As the company had been incorporated by statute, and the powers, rights, and duties of the directors and of the shareholders, to the public and to each other, had been defined and regulated by this statute, neither the directors nor any number of the shareholders were entitled to deviate from the rules laid down by the statute, or to dissolve the company, or to divert its property to other purposes than those prescribed and authorized by the statute, or to deprive him without his concurrence, of his right and interest in the company, or to transfer his right and interest therein to any other company, or individual, or set of individuals, without his consent.2. As the company had abandoned the object and infringed the constitution of the company by converting

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On the other hand, it was pleaded by the Oil Gas Company, 1. That under the circumstances in which the affairs of the company were placed at the time of the agreement with the Coal Gas Company, the Oil Gas Company was legally entitled to abandon the manufacture of oil gas, to dispose of its property, and divide the proceeds rateably among the proprietors; and these measures having been effected in the way most beneficial for the shareholders at large, it afforded no relevant ground of action or complaint against them that the consent of Mr. Clyne, an individual proprietor of stock, was not specially adhibited.2. That Mr. Clyne was barred by homologation and acquiescence from challenging the proceedings of the Company, and having sustained no loss from the proceedings, but, on the contrary, having generally benefited thereby, his claim of repetition and damages against them was unfounded.These actions were remitted to the Jury Court. In the action at the instance of the Oil Gas Company against Mr. Clyne the following issue was prepared:any part thereof, with interest thereon from the 13th day of February 1836, as the instalments or instalment on the shares of the said company held by the defender as aforesaid.”
“Whether the defender is indebted and resting owing to the pursuers in the sum of 130 l . sterling or any part thereof, with interest thereon from the 10th day of January 1826, and the sum of 130 l . sterling or

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And in the cause in which Mr. Clyne was pursuer the following issue was prepared for trial:
“Whether the defenders wrongfully violated the provisions of the aforesaid statute, and thereby became indebted to and are resting owing to the pursuer in the sum of 1,183 l . 10 s . 5 ¼ d . or any part thereof, with interest thereon, as the value of the shares of stock held by the pursuer as aforesaid?”
or “Whether the pursuer homologated or acquiesced in all or any of the said actings of the defenders?”Both causes came on for trial on the 19th of December 1831. After the counsel for Mr. Clyne had opened his case, the following agreement was in presence of Mr. Clyne subscribed by the counsel for the parties, in consequence of a suggestion from the bench that the causes were much more proper to be decided by a referee than by a jury:—
“The parties agree to refer the two actions to Mr. John Boyd Greenshields, with full power to determine all questions between the parties, and to determine the question of expenses; and they request the Court to interpone their authority to this minute of judicial reference.
John Hope, for Pursuer.James Keay , for the Oil Gas Company. Failing Mr. Greenshields the parties agree to refer to any referee to be named by the Lord President.John Hope. J. Keay.19th Dec. 1831.”

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On this minute being lodged in process, the Lord President made a remit to Mr. Greenshields, who however declined to accept the reference. On the same day, and before the interlocutor containing the remit to Mr. Greenshields was signed, Mr. Clyne wrote to the Clerk of the Jury Court, stating that he had just returned from the Court, and was ignorant of the tenor of the minute which had been proposed or agreed to; that the proposal was quite unexpected by him, and therefore he took the first opportunity of stating, that if it “contains any thing prejudicial to the ordinary remedies of law, and particularly to the right of appeal to the House of Lords, it is what I cannot assent to.” He wrote in the same terms to the opposite agent. On the 22d December he moved the Court to remit both causes to the Lord Ordinary, and the Oil Gas Company at the same time moved the Court to name a new referee. On considering these motions, the following interlocutor was pronounced:
“The Lord President, in virtue of the power given to him by the within judicial minute, and in respect Mr. Greenshields has declined to accept, names Mr. Duncan M'Neill, advocate, as judicial referee in these cases, and the Lords of new remit to the said Duncan M'Neill, as judicial referee, to consider the cases, and to report; and continue both cases till such report is made; and refuse both motions for Mr. Clyne.”
Mr. M'Neill accepted the reference, and on the 25th of May 1832 pronounced an award on the narrative, inter alia, of “My having frequently met with the agent for the Edinburgh Oil Gas Light Company, on behalf of the said company, and with the said

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The Oil Gas Company applied to the court to interpone their authority to the award; Mr. Clyne opposed the motion on the ground, 1st, That the alleged reference was not binding on him, and he had recognised

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The court pronounced the following interlocutor, dated 28th June 1832:
“Dismiss the motions for David Clyne, and approve of this award by Duncan M'Neill, the judicial referee; interpone the authority of the court thereto, and decern against the parties for implement thereof to each other.” 1
Mr. Clyne having died, Sir William Baillie and others, his trustees, presented an appeal in the cause at the instance of the company against him, and a separate appeal in the cause at his instance against the company.Appellants .—1. The alleged reference never was entered into by Mr. Clyne, and that which was subscribed

Footnote

1 10 S., D., & B., 723.

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2. The circumstances under which the judicial reference is said to have been entered into rendered it still more objectionable. It is evident from the record that the questions raised under both actions were questions of law, and not such as could competently or with propriety form the subject of a jury trial. Accordingly, Mr. Clyne uniformly contended that both actions ought to be decided in the Court of Session; while the respondents insisted that they should be remitted for jury trial, although the jury clerks declared that issues embracing the real merits of the case could not be framed.3. The alleged award is incompetent on various grounds, independent of the nullity of the minute of reference on which it is said to have proceeded. By the first finding in the award the Oil Gas Company have obtained decree for the whole of their demand, thus finding by implication in the action against Mr. Clyne that the company was entitled to dissolve itself without the authority of Parliament, by virtue of which it existed, to alienate its property and Mr. Clyne's interest

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By the second finding, the referee, instead of awarding the sums actually disbursed by Mr. Clyne, or lost by him, reduced his claim to 780 l ., and by deducting the amount of the calls pursued for by the company reduced it still further to 490 l . 3 s . 1 d . Again, instead of giving an immediate decree for that sum, a condition was introduced into the award, for which neither the summons nor the record gave any warrant; viz. that Mr. Clyne should be entitled to recover this reduced sum, or any sum due to him, only “upon his surrendering the fifty-two shares held by him, or transferring the same in favour of the said company, or of any person or persons they may direct for their behoof.” Thus, instead of a decree under the summons for any sum of damages, there was only a conditional finding; and Mr. Clyne, unless he complies with the terms of it, is denied all redress. By the third finding of the award, the Oil Gas Company “are entitled to reservation of any claim they may have against Mr. Clyne for any calls or instalments subsequent to the 13th February 1826, paid by other partners of the company, but not paid by Mr. Clyne; and Mr. Clyne is entitled to have his defences against any such claim reserved.”

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The record in the Court below, and the documents therein referred to, warranted an immediate decree in both actions in favour of the appellants. The late Mr. Clyne having purchased and held shares in the Oil Gas Company on the faith of an express agreement between the parties, and also of an act of Parliament regulating the purposes for which the company was to be carried on, and the company having violated the provisions of that agreement and of the act of Parliament, and in particular having not only expended large sums of the company's stock in applications to Parliament and in other purposes, useless and prejudicial, and inconsistent with the statute, but having also finally extinguished the company, contrary to the statute, and merged it in a totally different company, to which they conveyed away all its property for an inadequate consideration, Mr. Clyne was entitled, in respect of these proceedings, to recover from them, in the action at his instance, the whole sums which he advanced on the faith of the contract and of the statute, and also the amount of loss which he has sustained from these proceedings.The referee, by his award, has held that Mr. Clyne was bound, as a partner of the Oil Gas Company, to sanction proceedings contrary to their statute; and further, to transfer or allow his right and interest to be conveyed over to a different company for an inadequate

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The same author observes, “that upon another occasion it was said by the then Lord Chancellor 2 , if it appeared that the arbiters went upon a plain mistake, either as to the law or on a matter of fact, the same is an error appearing on the face of the award, and sufficient to set it aside.”The decerniture for one of the calls by the judicial referee was clearly illegal, because by the act incorporating the company the committee of management were not authorized to declare calls at a shorter distance from each other than one month, whereas the two calls pursued for had both been declared at the same time.Respondents .—1. The parties having entered into a judicial reference, whereby they agreed to refer the mutual actions to the decision of Mr. John Boyd Green-shields, advocate, whom failing, to the decision of a referee to be named by the Lord President of the Court of Session, and the Lord President having appointed Mr. Duncan M'Neill, advocate, who accepted the reference, and pronounced an award, to which the authority of the Court was duly interponed, the appellants are bound to implement that award. A judicial

Footnote

1 Caldwell, p. 63.

Footnote

2 Cornforth v. Geer , 2 Vern. 705.

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It is in vain for the appellants to maintain that Mr. Clyne was no party to the reference, and only recognised Mr. M'Neill as a commissioner leading a proof, on the import of which courts of law were to decide. It is not denied that the minute of reference was signed at the bar of the Court, in presence of the jury, by the leading counsel for Mr. Clyne, who opened the case on his behalf; neither is it disputed that it was signed by the authority and in the presence of Mr. Clyne, who conducted his own case as agent. In the letter addressed by him to the jury clerk, after the reference had been agreed to, he expressly admits that he was in Court when the minute was signed. In that letter he neither pretends that the minute was signed without his authority, nor does he repudiate the reference, but merely reserves the ordinary remedies of law competent in such proceedings.2. The objection that the award of the judicial referee was pronounced ultra vires compromissi, in so far as it ordained Mr. Clyne to surrender the fifty-two shares of the Oil Gas Company's stock held by him, is not well founded. The action at the instance of

Footnote

1 Art of Regul., 1595, sec, 25.

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3 The award by the judicial referee sufficiently exhausts the reference; and it is no objection that it contains a reservation, in favour of the Oil Gas Company, of other claims for instalments due subsequent to February 1826. The action at their instance concluded for payment of the calls only which had fallen due at and prior to that period. For those which have become payable subsequently no action has yet been raised, and as it was only the claims included in the mutual actions then in dependence, which were judicially referred to Mr. M'Neill, it was

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The reason of the respondents claim for the subsequent instalments being noticed at all in the award was, on the one hand to prevent them from withholding payment of the sums found due to Mr. Clyne by the referee on the plea of compensation, and on the other to prevent Mr. Clyne, or his representatives, from maintaining at a future period that these instalments fell under the reference, and had been decided by the arbiter.The award by the judicial referee is well founded on the merits. When the agreement was entered into with the Coal Gas Company the affairs of the Oil Gas Company were in the most hopeless condition; their stock had not only fallen below par, but was unsaleable at any price; the production of oil gas had been ascertained to be so expensive as to render it impossible for the respondents to compete with the Coal Gas Company, and no alternative therefore was left but that of suspending the operations of the Oil Gas Company, disposing of their property to the best advantage, and dividing the proceeds among the shareholders. Accordingly this is all that was done by the agreement in question. The powers of the Oil Gas Company, as established by act of Parliament, were not disposed of. It is true that a condition was annexed to the bargain that the Oil Gas Company should dissolve itself when required; but as this cannot be done except by an act of Parliament, which has not yet been applied for, the Oil Gas Company is still in existence, and it is so considered

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The two instalments concluded for in the action at the company's instance against Mr. Clyne were made in terms of the statute, in respect that although the intimation of the two calls were made to the proprietors at one and the same time, more than a month elapsed between the respective terms of payment. 1

Footnote

1 When these causes came to be heard at the bar the value of the Coal Gas Company's stock had risen in the market greatly beyond what it was at the period when the agreement between the two companies was entered into; and on the 14th of May 1835, after Sir John Campbell had opened the case on the part of the appellants, an agreement, which was embodied in the following judgment, was entered into between the parties, on the suggestion of the Lords Lyndhurst and Brougham.
“It is ordered and adjudged, by the Lords Spiritual and Temporal, in Parliament assembled, that the appellants be at liberty to withdraw their said appeal, by consent of the respondents, upon the terms following, (that is to say,) that the appellants do pay or cause to be paid up all the oil gas calls, as paid by other shareholders, with interest upon the same, and that the said appellants be let in to shares of the Coal Gas Company in proportion to the number of their shares in the Oil Gas Company like the other proprietors, and be paid up all dividends on such coal gas shares, with interest thereon; and that all proceedings, including the action in implement of the award, be stayed and abandoned, each party bearing their own costs, and that the appellants do pay one half of the arbiter's expenses.”
The day after this agreement was entered into, the agent for the appellants in Scotland, who was a trustee and one of the residuary legatees under Mr. Clyne's deed of settlement, presented an application to the House of Lords, stating, that when the said agreement was proposed at the bar he had been taken by surprise, and had not time duly to consider its import before it was signed by his counsel. That, on further reflection, he was satisfied that it would, if carried into effect, be very prejudicial to the interests of his constituents, particularly in so far as it stipulated that they should pay to the Oil Gas Company all calls made subsequent to the commencement of these proceedings, and for which no action had yet been raised by the company, and he therefore prayed their lordships to allow the causes to be reheard. That application was remitted to the Committee on Appeals, and after some discussion the prayer of this petition was granted, on condition of the appellants paying the additional costs thereby incurred. This order having been complied with, the causes were again heard.

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Lord Brougham .—My Lords, upon two points 1 have no doubt in this case. In the first place, I have no doubt that the point with respect to the two calls, whether, in regard of the amount being twenty per cent. instead of ten, or in regard to the calls being two at the same time instead of two calls separated by an interval of a month and upwards,—that point has never been left to be decided by a jury; and if it shall be said that the issue did not leave that point to be decided by a jury I do not exactly see what was sent to be tried, except this very point. Nevertheless, I think if it be something less, or more than was necessary, or as much as was necessary, it is in point of fact the same amount that was left to the jury by that issue, and therefore the objection seems, in another stage of the proceedings, really in substance to come to the same thing, namely, instead of sending the issue to be tried, which is the objection, that they sent no issue to be tried at all but an issue of fact and an issue of law, when facts enough were admitted to raise a point of law, which I think they ought to have taken, and decided whether this was or was not contrary to the fifty-second section of the act. Now, the other point upon which I have no doubt, in certain respects, is, that the subsequent finding and award is not final, and that it does not direct any thing specific or positive to be done, but merely upon one party doing something, something is also to be done by the other;—if Mr. Clyne chooses to give up those shares, and divest himself of that property, the company shall pay him so much. It is in vain to say that this was only directing a party to do so and so, upon another party producing letters of administration; it is in vain to say, it is like a party who is

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The case then stood over till the 17th of July, when— Lord Brougham said, My Lords, in this case I stated at considerable length, in the course of the argument and when the argument had closed, the view which I took of the two most material parts of it, and I stated the reasons why it appeared to me to be impossible to agree entirely with the judgment which had been pronounced below upon the former part of the case, affirming in all respects the award of Mr. M'Neill the arbitrator. It appeared to me that the award was not final in respect of the second finding, which did not give a positive direction to Mr. Clyne to surrender his shares, but only a conditional order, which imported that if he thought fit he might surrender them upon receiving the compensation stated from the company. But a question also arose, whether the third finding was not equally defective in point of conclusiveness, as it reserved to one of the parties all right of action with respect to the other calls which had not become due at the time the submission to arbitration was entered into. This depended upon whether or not we construe the words of the reference as importing a submission to arbitration of all matters in dispute between the parties, or only a submission to arbitration of the matters in dispute in the action already brought, and which was then referred. The words of the reference were these, “The actions, and all questions bewteen the parties,” or “all other questions, between the parties;” and it appeared to me that this was a reference of all matters in dispute; it undoubtedly would have been so with us, being one, and perhaps the most ordinary mode of making a general reference to arbitration. If we refer all matters in dispute in a cause, that of course only is a submission to arbitration

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The following judgments were thereafter pronounced: In the action at the instance of the Oil Gas Company against Mr. Clyne, “It is ordered and adjudged, by the Lords Spiritual and Temporal, in Parliament assembled, that the interlocutors complained of in the

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In the action at the instance of Mr. Clyne against the Oil Gas Company, “It is ordered and adjudged, by the Lords Spiritual and Temporal, in Parliament assembled, that the interlocutors complained of in the said appeal be, and the same are hereby reversed: And it is further ordered, that the said cause be

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Solicitors: Spottiswoode and Robertson, — Richardson and Connell, Solicitors.