Johnstone v. Duthie

15, 1892

supplied to my shop at 50 Summerfield Terrace, I hereby guarantee and undertake to see you duly paid for all goods you may supply from and after this date to the order of J. R. Cormack, to whom I have made over my business there."

The pursuers supplied goods to Cormack under this letter of guarantee until the end of April 1890.

The usual course of dealing was that the account for supplies was rendered monthly, at the beginning of the next month, and squared at the beginning of the next succeeding month by a payment in cash, the balance being carried forward to the next month's account-thus, for example, the account for goods supplied in May was rendered in June and settled as I have stated in July-Cormack thus in all cases getting a month's credit. Sometimes, however, bills, generally at two months' date, but occasionally at three, were taken for the monthly balance due, and these bills were sometimes renewed, thus extendiug the credit to five or six months.

It appears that Cormack had become unsteady, and at the end of April 1890, all supplies to him under the letter of guarantee came to an end. The account was closed and the defender was under no further liability under the guarantee except for the balance due and unpaid upon that account.

The position which the defender took up at this time as to his liability under the guarantee is material, and is to be found in the correspondence between him and the pursuers, from which it appears clear that the defender at this time denied his liability under the guarantee, although upon a different ground from that now insisted in, and left it to the pursuers to take their own course for recovery of the amount. So far as I see he never departed from this position.

What followed was that Cormack paid for some time £10 a-week, and afterwards £5 a week towards reduction of the amount until 10th November 1890, leaving a balance then due of £137, 15s., which is the sum sued for.

On the 26th of September, however, the pursuers took from Cormack two bills at three months' date for £99, 17s. 4d. and £70, 18s. 4d. respectively, in order, as they say on record, to constitute and settle the amount then due by him to the pursuers, and also to enable the pursuers to have the use of the money by discounting said bills with their bankers.

That that was so there is no doubt, because Mr Alexander Johnstone, one of the pursuers says "The payments went on till November 1890, when Cormack became bankrupt. The amount due by the defender is £137, 15s. At the date of Cormack's failure we had a claim for £12, 9s. 4d. for goods supplied after the arrangement had been made. There are two bills dated 26th September 1890 for £170 odds. These were taken to square up the account, and to make the account operative, so that we could have the use of our money from the bank by discounting the bills."

It is in these circumstances that the

The defender

present action has arisen. denies liability on the ground that it was an implied condition of the agreement that the pursuers should not allow Cormack credit exceeding one month beyond the month of supply in accordance with custom in the grocery trade, but had allowed him an unreasonable and excessive period of credit outwith the ordinary conduct of that trade.

The Sheriff has in effect sustained that contention and assoilzied the defender. He finds in point of fact that the ordinary period of credit allowed by the pursuers in the ordinary course of business with persons such as Cormack was about three months, and that they allowed him credit to such extents as five, seven, and twelve months, and he finds in point of law that by extending Cormack's credit far beyond the period usual in their ordinary business they have liberated the defender from his obligations under the letter of guarantee.

It appears to me that the ground of judgment thus adopted by the Sheriff raises questions of doubt and difficulty, and while I do not say that I differ from him I would prefer to rest the judgment on another, and I think a clearer ground of judgment also pleaded by the defender.

As I have already pointed out, all transactions under the letter of guarantee came to an end in April 1890. The account was closed and the amount alleged to be due by the defender then ascertained. It is true that the pursuers agreed that Cormack should make certain cash payments to account of the balance due. Whether this was with or without the consent of the defender does not appear to be material, because so far as I can see they did not thereby bar themselves from proceeding at any time to recover the amount due. But the case is different with regard to the two bills at three months' date taken by them on 26th September 1890 for the balance of the debt then due. They could not have sued Cormack, the principal debtor, during the currency of these bills, and so they gave him time. It is not averred, and is not the fact, that the defender consented to their taking these bills. He all along denied liability under the guarantee and left the pursuers to take their own

course.

But it is quite settled law that if the creditor gives time to the principal debtor the cautioner is free. Neither is it necessary for the cautioner to show that he has been thereby de facto prejudiced. The case of Samuel v. Howarth, 1817, 3 Merivale, 272, is an example of that. It is suggested, however, that where, as in this case, the cautioner denies liability, the creditor is free to take what steps he thinks best for recovery of his debt from the principal debtor and may give him time without releasing the cautioner. I know no authority for that proposition. The creditor can only enforce the obligation he has received from the cautioner. I do not see that the fact that the debtor in an obligation denies liability can at all alter or affect the extent of his obligation, what

Wednesday, March 16.

SECOND DIVISION.

[Lord Kyllachy, Ordinary. PETERS v. MAGISTRATES OF GREENOCK.

Church--Stipend "Competent and Legal" Stipend-Burgh-Contract or Trust.

The New or Mid Parish of Greenock was erected by the Court of Teinds in 1741. The decree bore that the managers of the burgh (the predecessors in office of the present magistrates) having received a sum of £1000, raised by voluntary assessment, and having been promised further contributions, were to have the patronage of the new church, the right to levy and appropriate the seat-rents and certain other rights, and were to provide the minister with "a competent and legall stipend not under 950 merks, with 50 merks for the Communion Elements" (together equivalent to £55, 11s. 1d). The sum of £1000 was subsequently mixed with the town's funds and applied to pay its debts.

Held, in an action brought in 1891 against the Magistrates of Greenock, that an onerous contract had been entered into which bound the managers of the burgh and their successors in office to provide such a stipend to the minister of the Mid Parish out of the revenue of the burgh as should be legal and competent according to the circumstances of the time-the amount in case of dispute being from time to time fixed by the Court-diss. Lord Young, who was of opinion that the £1000 simply constituted a trust-fund with the managers of the burgh as trustees; further that if it was a case of contract, 950 merks should be the limit of the obligation.

The Rev. David Smith Peters, minister .since 1877 of the New or Mid Parish, Greenock, raised an action againt the Provost, Magistrates, and Town Council of the burgh of Greenock to have it found and declared "that the pursuer, as the minister serving the cure of the New or Mid Parish Church and district thereof, within the burgh of Greenock, was and is entitled to be furnished and provided by the defenders, and that the defenders were and are bound to furnish and provide the pursuer, with a competent and legal stipend, to be paid out of the revenue of the burgh, or out of the other funds, property, and revenues held and enjoyed by the said Magistrates and Town Council for the special use and behoof of the minister serving the cure of the said church and district, from the date of his ordination and induction to the said cure, and in all time coming, during his lifetime and serving said cure,” and he sought decree for payment of certain arrears upon the footing that from Whitsunday 1880 until Martinmas 1890 his stipend ought to

have been £320 per annum, and from the latter date £400 per annum, or such other sum as should appear to the Court to be a competent and legal stipend, reserving his right and that of his successors in the cure to apply for an increase of stipend in the event of the sum presently decerned for ceasing to be a competent and legal stipend.

It appeared that prior to 1741 there had been only one parish and one church in the town of Greenock, and the population having so increased as to render a second church and minister desirable, Sir John Schaw, who was superior and principal heritor of the parish, and also patron of the parish church, took steps to have a second parish planted in the town. By charter, dated 30th January 1741, he empowered the feuars and sub-feuars of the burgh of barony of Greenock to meet yearly and choose managers of the public funds that had arisen or that might arise from assessment. At said date the existing funds, which were derived from a voluntary assessment upon malt, amounted to £1000, and upon 7th February 1741 Sir John Schaw granted to the managers a heritable bond for £1000, with interest from Candlemas of that year, the instrument of sasine upon which bond, dated 18th February 1841, bore that Sir John Schaw bound and obliged himself to repay the £1000 to these managers, and to the survivors or survivor, in trust "for themselves and the whole other feuars and householders of the said burgh of barony, and of the new parish of Greenock, when the same shall be erected, in order to be applied for the special effect and purpose of being part of the benefice of the said parish, when, or in case it shall be erected, and in trust, that such erection being once legally made, the foresaid persons, or survivor of them, shall denude themselves by assigning and disponing the said bond in security to and in favour of the minister who shall be first settled in the said new erected parish, and to his successors in office in all time coming during the not redemption or until payment, to the intent that such minister and his successors in office may receive the rents and profits thereof during their respective incumbencies, and that the said rents thereof in time of vacancy may be uplifted and applied as accords of the law, and that the minister for the time being shall not have power to uplift or receive the principal sum above written without the consent of the persons above named, or major part of them, or the survivors or survivor of them, or the major part of the said survivors, and failing of them all, without the consent of the Procurator for the Church for the time being, and failing of him, without the consent of the Lord President of Session, or the King's Advocate or Solicitor, or the Dean of the Faculty of Advocates for the time being, to the end that the said principal sum so uplifted and received may forthwith, or as soon as possible, be employed upon land or annual rent for the same uses,' and he bound himself to pay an annual rent of £50 for said sum, for which he conveyed certain lands in security to these managers, or the

survivors or survivor of them, in trust "for themselves and whole other feuars and householders of the said burgh of barony, and of the new parish of Greenock when the same shall be erected, in order to be employed for the special effect and purpose of being part of the benefice of the said parish when or in case it shall be erected, and in trust that such erection being once legally made, the forenamed persons shall denude themselves by assigning and disponing this bond in security to and in favour of the minister."

Upon 15th July 1741 the New or Mid Parish was erected by decree of disjunction and erection pronounced by the Court of Teinds, which proceeded upon the narrative-" And whereas by the great encrease of the town of Greenock of late years, in trade and people, and consequently of the paroch of Greenock, whereof the town is a part, the erection of the new kirk is become absolutely necessary for the greater success of the Gospell in that place, and is much desired by all the inhabitants thereof, who have provided a sufficient fund for building a new kirk and endowing a minister with a competent stipend, not less than nine hundred and fifty merks of stipend, and fifty merks for communion elements, towards which the pursuers have already laid out upon heritable security on the lands of Kirkmachaell the sum of one thousand pounds sterling, and have bound themselves by contract to pay a certain contribution yearly for fifteen years, which will be sufficient to compleat a fund for the stipend, and to defray the expense of building a church."

The decree found and declared-"That a new church be planted, builded, and erected, within the bounds @ described for the said new paroch, and that a minister be settled for serving the cure at the said church, and that the baillie of Greenock and managers of the fund for building and endowing the said church, and the feuars and elders of the said new erected paroch for the time being have, in all time coming, the sole and undoubted right of patronage of the said new church, and the right of presentation and calling a minister to serve the cure thereat how soon the said kirk shall be erected and accomodated for publick worship, and as oft in all time thereafter as any vaccancy shall happen; and of modelling and disposing the said church and haill seats thereof and bounds within the same, and of setting and uplifting rents for said seats, and of naming and appointing the beadles, bellman, or doorkeepers of the said new church, and of readers, precentors, and clerks for the said kirk and sessions thereof from time to time as they shall think fit; and of disposing, during any vacancy, of the fund' which shall be provided by them for a stipend to their minister, or for communion elements, manse, or schoolhouse, with this provision and condition always that Sir John Schaw of Greenock, and the other heritors of the parish of Greenock, their heirs and successors, in their respective lands and heritages nor the teinds thereof, shall not be lyable

in payment of any stipend to the minister of the new paroch, or for building, upholding, or repairing the kirk, manse, or schoolhouse thereof, or any other parochial burdens whatever; but have declared, and hereby declare, them free thereof in time coming, as also have decerned and ordained, and hereby decern and ordain, that the baillie, feuars, and inhabitants of the said burgh be bound and obliged, not only to defray the expense of erecting, building, and repairing such kirk, manse, and schoolhouse, and other parochiall burdens, but also to provide the minister of the new church so to be erected with a competent and legall stipend not under nine hundred and fifty merks, with fifty merks for the communion elements."

From 1741 to 1751 the finances of the said New or Mid Parish Church were managed, and the revenues thereof were collected and disbursed by the managers, under said charter of 1741. In 1751 Sir John Schaw granted a new charter, authorising the feuars and sub-feuars of the town of Greenock to meet and choose, in place of the former managers, a body of two magistrates, a treasurer, and six councillors. This new body, upon its appointment, took charge of the financial affairs of the said church.

In the same year a local Act (24 Geo. II.) was obtained, which proceeded upon the narrative that "whereas the building of a new church, town-house, poor and schoolhouses, and also market-places for meal and flesh, and also of a publick clock, are extremely necessary, and much wanted within the said town, but the inhabitants thereof are not able to raise money to answer the expence thereof, nor to complete the said harbour, and to keep all the said works in repair, without the aid of Parliament," and authorised an assessment upon malt for thirty-one years. The church was completed and began to be occupied in 1761, and thereupon the Magistrates and Council proceeded to let the church seats, and to uplift the seat-rents. In 1767 they uplifted the £1000 contained in Sir John Schaw's heritable bond already mentioned, and applied the same in payment of debts due by the town, granting to the minister of said parish an obligation to pay annually to him, and his successors in office, the legal interest of the £1000, in partial satisfaction of the modified stipends of the parish for the time being. The said Magistrates and Council collected all the revenues of the church, and disbursed the minister's stipend and the other charges of the church down to 1833, when their place was taken by the Magistrates and Council elected under the Municipal Reform Act of that year, 3 and 4 Will. IV. c. 77. The lastnamed body now represented by the defenders, have continued the management of the church's financial affairs down to the present time, uplifting the seat-rents and other revenues, and paying the minister's stipend and other charges. The minimum stipend of 950 merks with 50 merks for communion elements amounted to only £55, 11s. 1 d. sterling per annum. In 1742,

v. Mags. of Greenock

16, 1892

£24, 8s. 103d. was added to the then minister's stipend by the managers of the burgh as a gratuity, and another £20 also as a gratuity in 1766, making the stipend £100. This was augmented in 1796 to £125, and in 1800 to £180, in consideration of the then high price of every necessary of life, and the usefulness of the then minister, but under declaration that the town was only bound to provide "the original yearly stipend of £100."

In 1803 the stipend was £220, in 1808 £270, in 1812 £295, in 1843 £220, under a declaration that "the legal stipend" was £120 (including £20 for communion elements), and in 1861 £320 under a similar declaration. Upon 2nd September 1873, on the occasion of a vacancy in the incumbency of said parish church, the Magistrates and Council adopted a resolution to the effect that the legal stipend should be £120 with the use of the manse, and that the incumbent should receive the balance of the seat-rents after providing for that stipend and for the cost of the maintenance of the church fabric and manse and for necessary repairs so far as such cost exceeded an average amount of £50 a year.

The pursuer, who was elected in 1877, received £385, £355, and £347, as stipend for the first three years of his incumbency respectively. In the year 1880, having scrutinised the terms of the receipts submitted to him, he found that these bore reference to the resolution of 2nd September 1873, and that the sums tendered to him consisted of (1) the so-called "legal stipend" of £120, and (2) the balance of seat-rents, after providing for that stipend and communion element money and for the cost specified in said resolution. Being of opinion that these sums did not satisfy the defenders' obligation to supply a competent and legal stipend, he, in the said year 1880, declined to sign acknowledgments for the sums paid to him, except under protest that his legal rights should not be prejudiced thereby. The defenders paid him, upon such qualified acknowledgments, the sums admitted by them to be due to him for the period down to Whitsunday 1884, but thereafter on 3rd June 1881 they adopted a resolution instructing their chamberlain not to take receipts for stipend from the pursuer when these bore that payment was accepted under protest. In consequence of said resolution, and the pursuer's declinature to grant unqualified receipts, the pursuer obtained no payment of stipend from the defenders after 19th May 1884.

The pursuer pleaded, inter alia—“(1) According to the terms and meaning of the decree of disjunction and erection of the New or Mid Parish Church of Greenock, and to the usage and prescriptive use and enjoyment following thereon, the defenders, as representing the community of the burgh of Greenock, are liable in payment of a competent and legal stipend to the pursuer as minister of the said church."

The defenders pleaded, inter alia—“(1) The pursuer's statements are irrelevant and insufficient to support the conclusions of

the action. (4) The sum which the defenders are legally bound to provide to the pursuer, as minister of the New or Mid Parish, in name of stipend and communion elements, not being in any view more than £120 per annum, and the stipend paid, so far as in excess thereof, having merely been voluntarily paid out of the common good, in the discretion of the Magistrates and Council for the time, the action cannot be maintained. (5) It is incompetent to augment the stipend of the pursuer out of the funds of the burgh. (6) Separatim-The Court of Session has no jurisdiction to augment the pursuer's stipend."

Upon 23rd June 1891 the Lord Ordinary (KYLLACHY) pronounced the following interlocutor:-"Finds that the obligation libelled contained in the decree of disjunction and erection dated 15th July 1741, is binding on the defenders: Finds that upon a just construction of the said obligation the defenders are bound to provide the pursuer and his successors in the New or Mid Parish Church of Greenock with a legal and competent stipend suited to the circumstances of the time, and the position and duties of the benefice: Therefore finds, declares, and decerns in terms of the first declaratory conclusion of the summons: Quoad ultra appoints the cause to be enrolled that parties may be heard as to the petitory conclusion, and reserves all questions of expenses; grants leave to reclaim."

"Opinion. This case of the Reverend David Peters against the Provost and Magistrates of Greenock was lately argued in the Procedure Roll, and I shall now endeavour to explain shortly the view which I take of the rights of parties.

"The decree of disjunction and erection of 1741 must, I think, be read as expressing a judicial contract, to which the predecessors of the defenders were parties, and under which the church of the New or Mid Parish of Greenock was erected by the Court of Teinds. It is therefore a document which, at least upon the parties to it, was and is binding according to its terms, and which requires to be construed on the same principles as any other contract. Accordingly, the first question is, What is the true construction of the obligation contained in the decree whereby the predecessors of the defenders became bound, inter alia, to provide the minister of the new church so to be erected with a competent and legal stipend not under 950 merks, with fifty merks for communion elements, payable at two terms in the year, Whitsunday and Martinmas, by equal portions?'

"Now, in considering that question, it becomes important to keep in view that the predecessors of the defenders who undertook the above obligation did so, not gratuitously, but for more or less onerous considerations-(1) They received a sum of £1000 sterling, provided by the principal heritor, or raised by voluntary contribution, and which sum, it is admitted, although originally lent out on bond, was subsequently mixed with the town's funds and applied to its general purposes; (2) they