Miller & Son v Oliver & Boyd
| Jurisdiction | Scotland |
| Judgment Date | 13 January 1906 |
| Docket Number | No. 58. |
| Date | 13 January 1906 |
| Court | Court of Session |
Lord Pearson, Lord President, Lord M'Laren, Lord Kinnear.
Arbitration—Clause of Reference in Agreement—True Intent and Meaning of Agreement—Question whether subsequent action excluded by clause of reference.—
An agreement between A and B for the transference to B of a printer's business belonging to A provided, inter alia, for the payment by B to A of a sum, as the price of the goodwill, ‘on the basis that A should introduce to B not less than a certain amount per annum of business turnover.’ The agreement contained a clause referring questions between the parties ‘regarding the true intent and meaning’ of the agreement to a named arbiter.
In an action by A against B concluding, inter alia, for the sum payable to him under the agreement as the price of the goodwill, B maintained that the sum was not due, in respect that A had not implemented the conditions entitling him to payment thereof, and averred that the turnover alleged by A was not a real turnover, but had been fictitiously increased by A. B also maintained that the action was excluded by the clause of reference in the agreement.
Held that the action was not excluded by the clause of reference, in respect that B's averments did not in any proper sense raise questions ‘regarding the true intent and meaning’ of the agreement.
Arbitration—Scope of Reference—Enlargement of Reference in Pleadings before Arbiter—Protest by Party after Record closed but before Proof.—
An agreement between A and B, for the transference to B of a business belonging to A, contained a clause referring questions between the parties ‘regarding the true intent and meaning’ of the agreement to a named arbiter. Disputes having arisen, the parties went to arbitration upon a simple acceptance of office by the arbiter. In the pleadings before the arbiter the parties respectively lodged pecuniary claims, which raised questions outside the scope of the clause of reference, in respect that their determination did not turn On the intent and meaning of the agreement. The arbiter closed the record and at first proposed to allow a proof in order to determine whether certain claims fell within the reference. Subsequently the arbiter proposed to allow the pursuer a proof of his whole claims and the defender a proof of a counter claim for damages. A thereupon protested against proof being led on matters not relating to the true intent and meaning of the agreement.
In a subsequent action by A against B concluding for payment of certain sums, which had been included in the claims lodged by A in the arbitration, B maintained that, assuming the claims to be outside the scope of the clause of reference in the agreement, the parties had by their proceedings before the arbiter enlarged the scope of the submission so as to include the sums sued for, and that the action was excluded by the enlarged submission.
Held (1) that the scope of the submission had not been enlarged, and accordingly (2) that the action was not excluded.
Arbitration—Reduction of Decree-arbitral—Question whether Arbiter whose decree has been reduced as ultra vires is disqualified from again taking up the arbitration.—
Held (per Lord Pearson, Ordinary) that an arbiter, who had issued a decree-arbitral which had been reduced on the ground that it was ultra vires and did not exhaust the reference, was not functus officio or disqualified from again taking up the reference.
Opinions on the question reserved in the Inner-House.
(SeeMiller & Son v. Oliver & Boyd, Nov. 10, 1903; 6 F. 77.)
J. Miller & Son, printers, late of Rose Street North Lane, Edinburgh, and Andrew Carruthers Miller, sole partner of that firm, as representing the firm and as an individual, brought this action against Oliver & Boyd, printers and publishers in Edinburgh, and the individual partners of that firm, for payment of Certain sums alleged to be due by the defenders to the pursuers under an agreement, dated 15th and 20th April 1897, for the transference to the defenders of a business belonging to the pursuers. The sums sued for were, inter alia, (1) £800, being the price of the goodwill of the business, and (2) £340, 9s. 3d., being the unpaid balance of the price of the stock in trade and fittings transferred under the agreement.*
The minute of agreement of 15th and 20th April 1897, founded on by the pursuers, was summarised in the Lord Ordinary's opinion as follows:—‘By that agreement the pursuer, who had been in business as a printer in Edinburgh, agreed to sell to the defenders the goodwill, plant, machinery, fittings, and business properties belonging to and used by the pursuer. The defenders (by article 3) undertook to pay the pursuer £150 a year in name of salary until such time as a rearrangement of management might take place; the pursuer in return therefor undertaking to devote his entire time and energy towards the promotion of the business prosperity of the firm and its partners, and to be subject to their and their successors' directions in connection with the business of Oliver & Boyd.
‘The second article of the agreement dealt with the price of the goodwill, and, stated shortly, provided as follows:—(1) It declared that the price of the goodwill had been mutually arranged to be £800, on the basis that the pursuer should introduce to the defenders not less than £1600 per annum “of business turnover” prior to 30th June 1898; and failing his introducing that amount of business turnover, the price of the goodwill was to be proportionally less. (2) The defenders bound themselves to pay the £800, or such lesser sum, to the pursuer “as at 15th May 1897”; but it was declared that in no event should such payment be demandable from the defenders until 15th May 1902, “unless this agreement shall be terminated previous to that date by the first parties”—that is, by the defenders. (3) It was further declared that at 15th May 1902 it should be in the option of the pursuer to demand payment of one-half only of the price of the goodwill, and to allow the remaining half to remain in the business until 15th May 1907 at 5 per cent interest. (4) The interest on the price of the goodwill for the period down to 15th May 1902 was to be paid at the rate of 21/2 per cent per annum. (5) After certain other provisions, the article ends with an undertaking by the defenders to pay to the pursuer “a commission of ten per centum upon the net profits of the whole printing business of Messrs Oliver & Boyd.”
‘As to the price of the stock, plant, machinery, and fittings, it was provided by article 4 that it should be fixed by mutual valuation; and by article 5 that it should be payable, as to £500, at 15th May 1897, as to a further sum of £500 at 30th June 1898,
and as to the balance at 15th May 1899. All three instalments were to bear interest at 5 per cent per annum from 15th May 1897 till paid.
‘The parties further bound themselves to implement the agreement to each other under a penalty of £500 over and above performance.
‘The agreement contained this reference clause:—“Should any question arise between the parties regarding the true intent and meaning of these presents, the same is hereby referred to Charles Ritchie, Esq., S.S.C., whom failing, to James Morton, Esq., secretary, Union Bank of Scotland, Limited, Edinburgh, whose decision, whether interim or final, shall be binding upon both parties.”’
The pursuers set out the provisions of the minute of agreement and averred that, in terms of the said agreement the pursuer Andrew Carruthers Miller entered on his duties with the defenders as joint manager of their printing department, and by means of his introduction over £1600 of business turnover was brought to the defenders' business prior to 30th June 1898.
The defenders admitted that the pursuer Andrew Carruthers Miller entered their service, but explained that he did not introduce a business turnover in terms of the agreement.
In a statement of facts the defenders, after setting out the clause of reference in the minute of agreement, narrated the proceedings in an arbitration before Mr Charles Ritchie, S.S.C., the arbiter named in the clause of reference,* and also the proceedings in an action of
reduction of the decree-arbitral brought by Miller & Son against Oliver & Boyd.*
In the proof led in the action of reduction the arbiter was adduced as a witness for the defenders Oliver & Boyd, and gave evidence as to how he reached the sum of £618, 7s. 11d. in the decree-arbitral.
The defenders further stated that, by lodging their different claims before the arbiter, the parties extended the scope of the original reference and the arbiter was entitled, as by consent of parties, to deal with the questions which were presented by the respective claims; that the judgment pronounced in the action of reduction left the whole of the arbitration proceedings up to 30th October 1899 untouched; and that the pursuers were not entitled to proceed with the present action until the questions falling to be submitted, and, in fact, submitted by the parties to arbitration, had been determined by Mr Ritchie the acting arbiter. The defenders further stated (Stat. 9) ‘After the agreement between the pursuers and defenders was entered into, the pursuer Andrew Carruthers Miller accepted work at prices greatly below the current rate, and which he knew, or ought to have known, must result in a considerable loss. He did so in order to attempt to procure an apparent turnover of£1600, and so enable him to claim£800 for goodwill. The said pretended turnover which, as appearing from the pursuer's statements thereof, amounts to the sum of£1470, consists only of a business turnover in the sense of
the said agreement to the extent of£627. The balance thereof did not consist of legitimate business, but was introduced by the pursuer without the knowledge or consent of the defenders, and to the extent of at least£710 was so...
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