Van Laun & Company v Neilson Reid & Company
| Jurisdiction | Scotland |
| Judgment Date | 17 May 1904 |
| Docket Number | No. 111. |
| Date | 17 May 1904 |
| Court | Court of Session |
Lord Low, Lord President, Lord Adam, Lord Kinnear.
Agent and Principal—Rights of Agent—Commission—Quantum Meruit—Amalgamation of Businesses—Contract—Breach of Contract—Suspensive Condition—Execution of Formal Contract—Locus Pœnitentiœ—Rei Inter-ventus.—
A London firm, who alleged that they had large experience in connection with the amalgamation of businesses, in an action against three firms of locomotive builders in Glasgow, averred that in November 1899 they had entered into communication with each of the defenders asking them if they would consider a proposal for amalgamation; that after certain negotiations they were instructed by each of the defenders to arrange for an amalgamation; that the terms upon which they were so instructed were contained in a memorandum bearing that the defenders agreed that they would ‘enter into a proper legal contract when prepared with’ the pursuers ‘for the purpose of placing in their hands the conduct of the amalgamation,’ upon the basis that they were to pay to the pursuers 21/2 per cent on the amount paid to the defenders as vendors, this commission being payable only in the event of the amalgamation going through; that the pursuers were at considerable trouble and expense in endeavouring to effect an amalgamation, but in January 1900 the defenders intimated that they did not see their way to amalgamate; that notwithstanding this intimation the defenders availed themselves of the services rendered by the pursuers, and had now effected an amalgamation on the lines suggested by the pursuers (the new company being registered in February 1903); and that the amalgamation was the direct result of the pursuers' efforts. The memorandum referred to was not signed, and no formal contract for the employment of the pursuers was ever executed by the defenders. The pursuers claimed payment of £34,000 alternatively (l)as commission due ex contractu; (2) as damages for breach of contract; or (3) as on a quantum meruit for services. Held that the pursuers' averments were not relevant, in respect (1) that in the absence of rei interventus the defenders were entitled to resile until a formal contract was executed, and that there was no relevant averment of rei interventus; (2) that as there was no concluded contract there could be no claim of damages for breach of contract; and (3) that the pursuers had no valid claim for quantum meruit.
H. T. Van Laun & Company, merchants and freight contractors, London, and Henry Theodore Van Laun, sole partner of that firm, brought an action against (1) Neilson Reid & Company, engineers, Park Locomotive Works, Glasgow, and the partners of that firm; (2) Dubs & Company, engineers, Glasgow Locomotive Works, Glasgow, and the partners of that firm; and (3) Sharpe, Stewart, & Company, Limited, locomotive engine builders, Glasgow, in which the pursuers concluded for payment by the defenders, jointly and severally, of £34,000, or alternatively for payment of the sums of (1) £15,179, (2) £10,750, and (3) £8278 by the defenders first, second, and third called, respectively.
The pursuers averred as follows;—(Cond. 1) ‘The pursuers … have had large experience in connection with the amalgamation of different companies or firms carrying on similar businesses, and in making the necessary financial arrangements consequent on amalgamations. The defenders … were all firms carrying on extensive businesses as engineers in Glasgow, chiefly in the manufacture of locomotives.’ (Cond. 2) ‘In November 1899 the pursuers entered into communication with each of the said firms, asking if they would be disposed to consider a proposal for amalgamation of their business with a firm whose business was analogous in character, and pointing out the advantages of such amalgamation. The pursuers had numerous meetings with the representative partners of the defender firms in London, and at their request came to Glasgow, went over the defenders' works, and convened and attended meetings with the defenders, at which the question of amalgamation was fully discussed. The pursuers were instructed by each of the said three firms to arrange for an amalgamation of their different businesses, and they undertook the work.’ (Cond. 3) ‘The terms upon which the pursuers were employed by the said firms were contained in a memorandum of agreement, copy of which was handed to and approved of by each of said firms. Said agreement is as follows:—“The undersigned firms agree that they will enter into a proper legal contract, when prepared, with Messrs H. T. Van Laun & Company, for the purpose of placing in their hands the conduct of the amalgamation of their businesses, the basis of the amalgamation being:—… (3) That the undersigned firms undertake in the event of the amalgamation being carried out that Messrs H. T. Van Laun & Company shall be paid (21/2 per cent) on the total amount paid to the vendors for their services in the matter. … (4) Any capital which is necessary to be found shall be left to Messrs H. T. Van Laun & Company to negotiate, underwrite, or find subscribers for. … (5) The payment of the commission of 21/2 per cent is only payable in the event of the amalgamation going through.” Both the pursuers and the defenders acted upon this agreement, which was treated by all parties as binding upon them.’ (Cond. 4) ‘Prior to said agreement, the pursuer Mr Van Laun had brought the different firms together through their representatives. Thereafter he had several meetings with representatives of the different firms, and was at considerable trouble and expense in endeavouring to effect a successful amalgamation. In or about January 1900 the defenders, the said firms, intimated to the Pursuers that they did not see their way to amalgamate, and that this decision was come to owing to the probable effect an amalgamation would have upon certain important customers of the said firms. Notwithstanding said intimation to the pursuers, the defenders availed themselves of the services rendered by the pursuers, and have now effected an amalgamation by which the three firms are united under the name of the North British Locomotive Company, Limited. …’* (Cond. 6) ‘The amalgamation of the defenders' firms, which has taken place, is the direct result of the efforts of the pursuer Mr Van Laun. It has been carried out on the lines suggested by him. But for the said pursuer's intervention, the said firms, who were extremely jealous of each other, would not have proposed amalgamation. The said pursuer has always been ready and willing to give any further services required of him in terms of the agreement founded on, but the defenders did not require him to render such services. On the contrary, they did not even communicate to him the fact that his services had been successful in bringing about an amalgamation; and so endeavoured to deprive him of his commission. The defenders refrained from communicating with the pursuers with a view to benefiting by the services already rendered, and avoiding paying the commission agreed upon. …’
The sum first sued for was 21/2 per cent on the total sum paid by the amalgamated company to the defenders as vendors, and the sums claimed alternatively were respectively 21/2 per cent on the respective sums paid to each of the defenders.
The memorandum referred to in cond. 3 was not signed by the defenders, and no formal contract was ever executed.
The pursuers pleaded, inter alia;—(1) The pursuers, having by their services brought about the amalgamation of the defenders' firms, are entitled to be paid commission. (2) The sum first sued for being in terms of their agreement with the pursuers due by the defenders, decree ought to be pronounced in terms of the first conclusion of the summons. (3) Alternatively, the commissions payable in respect of amalgamation by each set of defenders being the amounts concluded for against them in the second conclusion of the summons, decree ought to be pronounced in terms thereof.
Each of the three firms lodged separate defences, and pleaded (1) that the pursuers' averments were irrelevant.
By interlocutor, dated 19th November 1903, the Lord Ordinary (Low) having heard counsel in the Procedure Roll, sustained the first plea in law...
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