Krupp v Menzies
| Jurisdiction | Scotland |
| Judgment Date | 16 May 1907 |
| Docket Number | No. 133. |
| Date | 16 May 1907 |
| Court | Court of Session (Inner House - First Division) |
Lord Dundas, Lord President, Lord M'Laren, Lord Kinnear, Lord Pearson.
ProofWritten ContractErrorAverment that written contract did not express the contract entered intoAdmissibility of parole evidence to correct error.
A formal minute of agreement between the proprietor and the manager of a hotel, entered into in 1900, bore that the proprietor was bound, in addition to a fixed salary, to pay to the manager one-fifth part of the net annual profit of the business carried on in the hotel, as the same should be shewn by the proprietor's books.
In an action brought in 1905 by the manager against the proprietor for accounting and payment to the pursuer of one-fifth of the net profits of the hotel during the five years since the date of the agreement, the defender averred that the contract between the parties was that the pursuer should receive, in addition to the fixed salary, 5 per cent of the net profits of the hotel; that another agreement between the defender and the manager of another hotel, in which the proportion of net profits effeiring to the manager was one-tenth, was given to a clerk with instructions to draft the agreement between the pursuer and defender on the same lines, but to halve the share of net profit set forth in that agreement; that the clerk, by an arithmetical error inserted one-fifth as being the half of one-tenth; and that the error in the formal agreement was not discovered by either party until immediately prior to the date at which the action was brought.
Held (rev. judgment of Lord Dundas) that the defender was entitled to a proof before answer of his averments.
Mrs Jessie Williamina Strachan Andrews or Krupp, lately manageress, Station Hotel, Mallaig, wife of William Krupp, lately manager of that hotel, and the said William Krupp, brought this action on 29th December 1905 against John Menzies, Limited, Edinburgh, concluding (second) for an account of the profits of the business of hotel-keepers carried on by the defenders at the Station Hotel, Mallaig, for the period from 1st November 1900 to 31st October 1905, whereby the true one-fifth part or share thereof due by them to the pursuers might be ascertained, and for payment of the sum thereby ascertained.
The pursuers produced and founded on a formally executed minute of agreement between the pursuers and the defenders, dated 31st October and 1st November 1900, which set forth the terms of the employment of the pursuers respectively with the defenders.
The minute of agreement, which was duly signed by the several parties thereto, was, inter alia, in these terms:(Sixth) The first party [the company] shall pay to the third party [Mrs Krupp] during the continuance of this agreement the sum of 148 sterling yearly, as the remuneration for the services to be performed by her to the first party as hereinafter specified, and that quarterly beginning the first of said remuneration on the 1st day of February 1901 years for the quarter year immediately preceding. The first party shall also, in addition to the salary above mentioned, pay to the third party one-fifth part of the net annual profits of the business carried on in the said hotel at Mallaig, as the same shall be shewn by the books of the first party. The said share of profits shall be paid by the first party to the third party as soon as its amount can be ascertained after the close of the first party's financial year.
The employment of the pursuer Mrs Krupp with the defenders under this minute of agreement extended over the defenders' five financial years from 1st November 1900 to 31st October 1905.
The defenders in answer averred:(Ans. 4) That the words one-fifth part were inserted in the agreement by a clerical error instead of the words five per cent, and that the pursuers are well aware of this fact. They are further aware that the managers of the defenders' other hotels were and are paid a percentage calculated on the net annual profits, and that none of them ever claimed or received a share of the profits such as the pursuers are now claiming.
The defenders also (Ans. 5) averred that certain payments were made by them to the pursuer Mrs Krupp, and explained that these payments were made by the defenders, and accepted by the pursuer, as representing 5 per cent of the net annual profits of the business, as ascertained in the manner specified in the said agreement for the purpose. The pursuer granted receipts for both of these payments. The sum of 15, 1s. 2d. was remitted to her along with a letter (which is produced herewith) bearing that it was made on the 5 per cent basis referred to. Five per cent...
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...to be and, so far as emerges from the authorities, this is what the Court has in fact done. For example in Krupp v [John] Menzies [LtdENR1907 SC 903] the action in which the defence of mistake was held relevant was for accounting and payment in respect of the period from the date of the min......
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...in such a case the law of Scotland afforded no remedy. To such a case one may surely apply the words of Lord Dunedin in Krupp v. Menzies 1907 S.C. 903 at page 908— "There are cases in which it would be truly a disgrace to any system of jurisprudence if there was no way available of rectifyi......