Asphaltic Limestone Concrete Company, Ltd, v Glasgow Corporation
| Jurisdiction | Scotland |
| Judgment Date | 26 January 1907 |
| Docket Number | No. 70. |
| Date | 26 January 1907 |
| Court | Court of Session |
Lord Ardwall, Lord M'Laren, Lord Kinnear, Lord Pearson.
Company—Winding-up—Two separate contracts with same party subsisting at date of liquidation—Power of Liquidator to adopt one and reject the other.—
Held that the liquidator of a company, which at the date of the liquidation was bound under two separate executory contracts with the same party, was entitled to adopt one of them and not the other, and that the company by not implementing both contracts was not barred from recovering payment for work done under the contract which had been adopted.
Company—Winding-up—Retention in bankruptcy—Two separate contracts with same party subsisting at date of liquidation—Liquid and Illiquid.—
A company, in 1902, entered into a contract with a Corporation to pave certain streets and to maintain the paving for ten years from the completion of the work, it being provided that four-fifths of the price should be paid on the completion of the paving, and the balance in instalments during the period of maintenance. In 1903 the company entered into another contract with the Corporation to pave certain other streets at a price which included ‘a free maintenance for five years’ of the paving. Three months after the date of the latter contract the company went into voluntary liquidation.
At the date of the liquidation the paving work under the 1902 contract had been completed, and four-fifths of the contract price had been paid to the company, but the paving work under the 1903 contract had not been fully executed. The liquidator did not adopt the 1902 contract but adopted the 1903 contract, completed the paving work thereunder, and was able and willing to carry out the obligation to maintain the paving for five years as therein stipulated.
Held that the Corporation was not entitled to retain the sum due in respect of the work completed under the 1903 contract either (a) in security of a claim of damages for failure to implement the obligation under the 1902 contract to maintain the paving for ten years, or (b) in security for the due fulfilment of the obligation under the 1903 contract to maintain the paving for five years.
Contract—Assignation—Assignability—Delectus personœ—Contract to pave streets and maintain the paving for fixed period.—
Held that a company, which had entered into a contract to pave certain streets and maintain the surface in good condition for a term of years, was entitled to assign the execution of the contract, in respect that in such a contract there was no delectus personœ.
In July 1902 the Asphaltic Limestone Concrete Company, Limited, Birmingham, entered into a contract with the Corporation of Glasgow to pave with asphalt certain streets within the city of Glasgow, according to a specification, at prices per square yard set out in the Company's letter of offer. The specification, which was part of the contract, provided, inter alia;—‘The offer at a rate per yard is to include … the maintenance of the surface in a thoroughly good condition, to the satisfaction of the Master of Works, for a period of ten years from the completion of the work … 80 per cent of the contract sum, as ascertained by measurement, to be paid on completion of the work to the satisfaction of the Master of Works, 10 per cent on the expiry of five years from the completion of the work, and the balance on the expiry of the period of upkeep. In the event of the contractor refusing or delaying to make good any deficiencies or defects in the surface when required by the Master of Works the Corporation shall have power to do so at the expense of the contractor.’ Under this contract the Asphaltic Company completed the work of paving the streets in November 1902.
In May 1903 the Asphaltic Company entered into a second contract with the Corporation of Glasgow to pave with asphalt certain other streets in Glasgow, viz., King's Drive and King's Bridge, according to a specification at prices per square yard set out in the Company's offer. The Company's offer stated:—‘These prices include a free maintenance for five years, all the other conditions in your specification are hereby agreed to. For the maintenance and repairs during the succeeding five years our price will be sixpence (6d.) per yard super per annum upon the total surface.’ The specification, which was part of this contract, provided, inter alia, as follows:—‘The offer to be at a rate per square yard for each area respectively, which shall include … the maintenance of the surface in a thoroughly good condition to the satisfaction of the General Manager of the Tramway Department and the Master of Works respectively for a period of five years from the completion of the work as certified by the Master of Works. … Eighty per cent of the contract sum as ascertained by measurement will be paid on completion of the work, ten per cent on the expiry of three years, and the balance on the expiry of the period of upkeep, in each case on the certificate of the Master of Works that the work has been completed and maintained in a satisfactory manner. In the event of the contractor refusing or delaying to make good any deficiency or defect in the surface when required by the General Manager of the Tramway Department or the Master of Works respectively during any period that the contractor is bound for maintenance, the Corporation shall have power to do so at the expense of the contractor.’
On 26th August 1903 the High Court of Justice, Chancery Division, on the petition of debenture-holders, appointed Elkanah Mackintosh Sharp ‘receiver on behalf of the plaintiffs of all the real and personal property now or hereafter belonging to the defendant Company, except uncalled capital comprised in or subject to the said mortgage debenture, and manager of the business of the defendant Company, with a view to its sale as a going concern, the said Elkanah Mackintosh Sharp to act at once. …’
On 1st September 1903, at an extraordinary meeting of the shareholders of the Company, it was resolved that the Company be wound up voluntarily, and Mr Sharp was appointed liquidator for the purpose of such winding-up.
By an agreement, dated 27th January 1904, between, inter alios, Mr Sharp and a new Asphaltic Limestone Concrete Company, Limited, incorporated in 1904, it was agreed that Mr Sharp, as receiver aforesaid, should sell the whole property and business of the original Asphaltic Company to the new Company, and the new Company undertook to satisfy, discharge, and complete all the contracts entered into by Mr Sharp, the vendor.
Mr Sharp, in September 1903, received payment from the Corporation for work done prior to his appointment under the contract of May 1903 (the second contract), and completed the work under that contract in November 1903. He did not take up the first contract.
On 26th January 1905 the Asphaltic Limestone Concrete Company, in liquidation, and Elkanah Mackintosh Sharp brought an action against the Corporation of Glasgow for £1172, 19s., as being the balance of the sum due to the pursuers in terms of the contract entered into in May 1903 between the said Company and the defenders for paving King's Drive, & c.
The Corporation defended the action on the ground that the pursuers the Asphaltic Limestone Concrete Company refused to fulfil or make provision for the due fulfilment of their obligations under said contracts to repair and maintain the said streets, although called upon to do so, and that, in consequence of this refusal, the Corporation had been obliged to make other arrangements for the maintenance of the streets at a cost of £2967, 6s.
The pursuers the Company pleaded, inter alia;—(2) The sum sued for being due in respect of work done by the liquidator of the said Company subsequent to the liquidation thereof, the defenders are not entitled to set off against the same any debts contingently due by the said Company to the defenders as at the date of the liquidation.
The defenders the Corporation pleaded;—(3) The pursuers are barred from recovering the balance due, in respect (a) they have not implemented the contracts between the said Asphaltic Company and the defenders, and (b) the liquidation of the Company, and separatim, their refusal to make provision for the due fulfilment of their obligation to repair and maintain the said streets in terms of the contracts operated as a breach of the contracts libelled.
On 22d February 1905 the Corporation of Glasgow brought an action against the Asphaltic Company and Mr Sharp, as liquidator of the Company, for payment of £2967, 6s., being the loss and expense alleged to have been incurred by the pursuers through the defenders having broken their contracts of July 1902 and May 1903, for the maintenance and repair of the streets specified in these contracts.
The sum sued for consisted (1) of £63, 6s. for repairs on King's Drive, & c., which were urgently required, and which had been executed by the Master of Works. Mr Sharp had expressed his willingness to execute these repairs, but required that payment should first be made of sums found due to him in November 1903 for work done under the second contract; (2) of £2904, for which sum the Corporation had got an offer from the Alcatraz Agency to maintain the streets under the two contracts. Of this sum £600 applied to maintenance of streets under the first (the Queen Street) contract.
The defenders the Asphaltic Company pleaded, inter alia;—(3) Separatim, the defenders, not having broken said contract, are not liable as for breach to the pursuers.
The actions were not conjoined. A proof was allowed in both actions, and the parties, by joint minute, agreed that the two actions should be tried together, and that the evidence and productions in the one action should be held as the evidence and productions in the other action.
The material facts disclosed at the proof and the...
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