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A. and G. Paterson Vs. Highland Railway Co. - Court Judgment

LegalCrystal Citation
CourtHouse of Lords
Decided On
Case Number[1926] UKHL 1
Judge
AppellantA. and G. Paterson
RespondentHighland Railway Co.
Excerpt:
viscount dunedin.—the present action is raised by a firm of timber merchants against the highland railway company, and asks for repayment of sums overpaid in respect of the carriage of timber for the period from 1st january 1920 to 15th august 1921. the sum actually involved in it is not large, but the question on which the case turns will apply to many other claims by other merchants of a like character, so that the sum involved is really a large one. on the outbreak of the war the supply of pit-props for collieries was brought to a standstill by the ceasing of foreign shipments. it became necessary to meet the demand by home-grown timber. there were available large quantities of timber in scotland, but much of it in neighbourhoods so remote from transport facilities that, unless.....
Judgment:

Viscount Dunedin.—The present action is raised by a firm of timber merchants against the Highland Railway Company, and asks for repayment of sums overpaid in respect of the carriage of timber for the period from 1st January 1920 to 15th August 1921. The sum actually involved in it is not large, but the question on which the case turns will apply to many other claims by other merchants of a like character, so that the sum involved is really a large one. On the outbreak of the war the supply of pit-props for collieries was brought to a standstill by the ceasing of foreign shipments. It became necessary to meet the demand by home-grown timber. There were available large quantities of timber in Scotland, but much of it in neighbourhoods so remote from transport facilities that, unless transport charges could be lessened, it was impossible to deal economically with the situation. Various bodies were interested in the question. The Board of Agriculture constituted a committee called the Pitwood Committee, on which representatives of Scottish landowners and the Timber Merchants' Associations had seats. Another committee called the Timber Supplies Committee was also set up, but it eventually became merged in the Pitwood Committee. Then, in 1915, another Committee called the Home-grown Timber Committee was appointed which superseded the Pitwood Committee, the members of which, however, still continued to meet and interest themselves in the question of supply. There was also a committee known as the Coal Mining Organisation Committee, appointed by the Home Office. These committees were purely advisory, and had no statutory powers.

On the outbreak of the war the Government had assumed control of the railways under the powers of the Army Regulation Act of 1871. While this empowered the Government to issue orders to the companies, the ordinary direction and management of the companies was not disturbed—see the remarks of Lush, J., in Denaby and Cadeby Main Collieries v. Great Central Railway Co., (1915) 16 R. and C.T.1, at p. 8. Prior to the war a committee had been brought into being called the Railway Executive Committee. It consisted of the general managers of the larger companies under the formal presidency of the President of the Board of Trade. It had no statutory powers, but it acted as a means of communication between the Government and the railway companies.

The object, naturally, in view of those interested in the timber trade— i.e., the owners of the timber and the timber merchants—was to secure such a moderate flat rate for the conveyance of pit-props as would make the sale of Scottish timber an economic proposition. It would be useless to go minutely into all the proposals. Suffice it to say that on 6th November 1914 the Board of Trade wrote to the Railway Committee as follows:—“… In these circumstances I am to request that the Committee will be so good as to reconsider the matter with a view to fixing rates not exceeding ten shillings a ton for this traffic during the present crisis.” On 10th November the Railway Executive Committee wrote to the Board of Trade as follows:—“With reference to your letter of the 6th inst. on the subject of certain reduced rates which it is proposed to put into force for the conveyance of pitwood to Scotch collieries during the period of the Government control of the railways, I have to say that, as intimated in the conversation we had to-day, the Scotch companies have agreed under the special circumstances indicated in your letter to adopt the 10s. per ton maximum rate on the understanding that all existing rates under 10s. per ton will be maintained”; and on 16th November 1914 the Board of Trade wrote to the Railway Committee,—“I am directed by the Board of Trade to acknowledge the receipt of your letter of the 10th November on the subject of reduced rates for the carriage of pitwood to Scottish collieries during the period of the Government control of the railways, and to state that they are glad to note the decision at which the Scottish railway companies have arrived in the matter.” This was followed by a circular from the Railway Executive Committee to the traders:—“European War.—“Exceptional Rates.—I have the pleasure to inform you that the Railway Executive Committee are prepared to put the following exceptional rates into operation. Such rates are quoted subject to the conditions shown therein; and, when not inconsistent therewith, to the conditions contained in the General Railway Classification, and also, in the Rate Books of the various companies over whose railways the traffic will pass. The rates will not be entered in the Railway Companies' rate books, and the Committee reserve the right to alter or withdraw any of these rates or conditions without notice. In any case the rates will not apply after the termination of the war.

“Please advise me if and when you decide to forward the traffic, so that the necessary instructions may be issued to the stations concerned.”

The timber was then carried and these rates charged. The traders and others interested endeavoured to obtain some promise that the rate fixed in November 1914 should be continued for a period beyond the termination of the war, and negotiations continued for more than a year. On the 10th of August 1915 the Board of Agriculture wrote to the Railway Executive Committee:—“Railway Rates for Pitwood.—“I am directed by the Board of Agriculture for Scotland to inform you that at a recent meeting of the Committee appointed to advise the Board as to supplies, prices, andc., of pitwood, it was suggested that the emergency rates on pitwood should be continued for six months after the cessation of war in view of the need for entering upon contracts several months (sometimes a whole year) beforehand.

“The Board will be glad if the Railway Executive Committee can give favourable consideration to their suggestion. A copy of this letter has to-day been sent to the Board of Trade.”

Eventually, on 2nd August 1916, the Railway Executive Committee wrote the following letter to the Board of Trade:—“Rates for Home-Grown Pitwood.—Referring to our previous correspondence on the above subject under your reference R. 1753, Mr Calthrop reported to the meeting of this Committee, on the 1st instant, the result of a meeting held with certain members of the Coal Mining Organising Committee on Thursday, 27th July 1916, and submitted a memorandum on the subject. After careful consideration, it was decided that the Railway Companies could not agree to (1) the establishment in England of a flat rate for timber or (2) that the present rates should cover timber up to 16 feet in length. We are, however, prepared to accept (3) the suggestion made by the Coal Mining Organisation Committee that the present exceptional rates which have been put into force shall continue during the period of the war, and for so long after the war as the present arrangement entered into between the Government and the Railway Companies remains in force. We feel that this concession would overcome any prejudice that woodlands owners might have in felling their timber, due to the uncertainty of the rates being changed after the period of the war. Will you be good enough to communicate with the Coal Mining Organisation Committee accordingly?” The respondents' claim in this action is based on this letter of 2nd August 1916.

Subsequent events were as follows:—On 15th August 1919 the Ministry of Transport Act, 1919 (9 and 10 Geo. V. cap. 50), came into force. That Act transferred to the Minister of Transport all powers and duties of any Government Department in relation to railways. It also conferred upon him powers which had not been previously enjoyed by any Government Department. In particular, section 3 (1) (c) provided as follows:—“The directors and other persons concerned with the management, and officers and servants of any undertaking of the whole or part of which, or of the plant whereof, possession is retained or taken shall obey the directions of the Minister as to the user thereof, and any directions of the Minister in relation to the undertaking or part or plant thereof of which possession is retained or taken:—(i.) As to the rates, fares, tolls, dues, and charges to be charged …” Section 3 (1) (e) is in these terms:—“In the case of any undertaking of which possession is retained or taken by the Minister as aforesaid any rates, fares, tolls, dues and other charges directed by the Minister shall be deemed to be reasonable, and may, notwithstanding any agreement or statutory provisions limiting the amount of such charges or increases therein, be charged in respect of any undertaking during the period for which the Minister retains possession of such undertaking, and for a further period of eighteen months after the expiration of the said period, or until fresh provision shall be made by Parliament with regard to the amount of any such rates, fares, tolls, dues, and other charges, whichever shall first happen.”

In August 1919 the Railway Executive Committee and the railway companies intimated to traders that the 10s. rate would cease to operate on 31st October 1919, and that as from 1st November 1919 the ordinary rates would apply. This intimation was followed by representations from those interested in the continuance of the 10s. rate. In deference to this appeal the railway companies agreed to continue the rate till 31st December 1919, and after that date ordinary rates were charged.

The Lord Ordinary, after proof of the circumstances, gave a decree for the whole sum. He held that a binding contract was constituted by the letter of 2nd August 1916, which contract could not be revoked until the end of the war, which by statute was dated 31st August 1921. His judgment was so far upheld by a majority of the Inner House, but they altered the sum actually decreed for upon a view which I do not propose to consider. Lord Hunter dissented, and held that the defenders were entitled to absolvitor.

Now the Dean of Faculty very truly stated that the modified charge on which the respondents insist could only be binding on the appellants in respect of (1) statutory authority, or (2) contract. The idea of statutory authority was examined and put aside by the Lord Justice-Clerk. The other Judges agreed with him, and in this House it was not insisted on.

I may therefore at once pass to the ground on which the respondents eventually rested their case. They said that the Railway Executive Committee were authorised agents of the appellants, and as such had power to bind them, and that the letter of 2nd August constituted a binding contract which could not be withdrawn during the period to which its terms applied. Various answers were made to this, but so far as I am concerned one is sufficient. Assuming that the Executive Committee were the agents of the appellants, what is the effect of the contract in the letter; and in particular is there a binding obligation therein contained which prevented its being withdrawn?

Great stress was laid on the distinction between Scottish and English law in respect of the doctrine of consideration. I have on more than one occasion had to deal with this topic, and I do not think I have ever shown any desire to introduce the doctrine of consideration into the law of Scotland. Nay, more, I am prepared to say that the opinion of Lord Ordinary Fraser, expressed in the now old case of Littlejohn v. Hadwen in which I was counsel many years ago, is right, i.e., if I offer my property to a certain person at a certain price, and go on to say: “This offer is to be open up to a certain date,” I cannot withdraw that offer before that date, if the person to whom I made the offer chooses to accept it. It would be different in England, for in the case supposed there would be no consideration for the promise to keep the offer open. But what is the reason of this? It is because the offer as made contained two distinct promises: (1) to sell at a certain price, and (2) to keep the offer open. It seems to me that (2) is completely wanting in the present case. It is just as if a tradesman put up a notice: “My price for such-and-such goods during November will be so-and-so.” That offer may at any time be converted into a contract by a person tendering the price for the goods, but there is no contract that the tradesman may not change his mind and withdraw his offer. Therefore, upon the simple question of contract, I think the argument for the respondents breaks down, and that in my mind disposes of the case.

The consequences of the other view would be very remarkable. An offer is made to do a certain thing at a certain price during a certain time. It is not specially addressed to some person, but is proclaimed, so to speak, urbi et orbi, so that anyone may come forward and say: “I will now take advantage of the price, and though you have withdrawn it, I say you were bound not to withdraw it.”

This being my view, I need not inquire as to what difference was made by the passing of the Ministry of Transport Act, though on this matter I do agree with the opinion of the noble and learned Lords who follow me. But I would like to say this: I think the railway companies have really adhered to the terms of their original proposal. I have no doubt whatever that “termination of the war” was understood to mean, and was thought by all parties to mean, the active cessation of hostilities, and up to that time the traders had the advantage of the rate. No doubt the complication, if one had been driven to consider it, would have been to reconcile the real meaning of the parties with the statutory determination, which put an artificial meaning on the expression “end of the war.” I

have not to consider that, but I am glad to think that, in my view, the respondents were suffering no real injustice.

I move that the appeal be allowed, and that the case be remitted to the Court of Session to give decree of absolvitor, and that the counter-appeal be dismissed, the appellants to have their costs and expenses both in this House and in the Courts below.

Lord Sumner.—In the Courts below there was some difference of opinion, perhaps more apparent than real, on the question whether the letter of 2nd August 1916 was a promise which, when promulgated, became binding on the defenders forthwith, or an offer which required some acceptance on the pursuers' part to enable them to enforce it. The Lord Ordinary says that “the mere tender of pit-props within the specified time was a full implement of the condition entitling the tenderer to demand fulfilment of the offer.” Lord Anderson thinks that “those who were interested in the timber trade were in effect invited to make forward contracts on the footing that the current railway rates would be continued for a definite period of time,” and that the pursuers, who said that they had made some such contracts, were promisees and entitled to enforce the promise. Lord Ormidale calls the letter an undertaking which contained termini habiles on which to form a contract with those who were willing to, and did, accept the proposal contained in it, namely, to carry timber at the rates presently in operation during the period stated,” and he dismisses as unimportant the distinction between “promise” and “offer,” since the letter was, in fact, accepted by the pursuers. The Lord Justice-Clerk, after alluding to the distinction, concludes that “the pursuers, following upon that undertaking and in reliance upon it, tendered goods for conveyance by the defenders,” and that “the undertaking thereupon became binding” between them. Lord Hunter's dissentient judgment clearly states the necessity of an acceptance by the pursuers of the offer that the letter contained, whatever it may have been.

Accordingly, although the alternative view was not abandoned at your Lordships' bar, I take it that the case is one of an offer to unspecified persons and of an acceptance on their part by doing whatever it is that the offer invites them to do. Was such an offer made, and was it duly accepted?

Let it be assumed, although I find it hard to believe, that the Railway Executive Committee had authority from the companies severally to bind them in the way alleged and to make contractual offers on behalf of individual companies, whose interests in general they looked after as against the Government. Let it be assumed also that the Board of Trade, which was asked in the letter to communicate its contents to the Coal Mining Organisation Committee, had authority to give the letter such further publicity as would, and did, intimate its terms to timber-traders generally and to the pursuers in particular. Let it be taken, in the third place, that the letter is not a mere expression of readiness to begin to negotiate if asked, but is a promise or the offer of a promise de prœsenti to be accepted in futuro. What then?

I do not think, in the first place, that the letter was meant to be, or in fact was, addressed in this round-about way to timber-traders severally, so as to convert an express aggregate offer into implied several offers, to be accepted by them one by one and thereupon to raise several contracts. I find it very difficult to read this document as the advertisement in Carlill v. The Carbolic Smoke Ball Co [1893] 1 QB 256 . was to be read, that is, as a standing offer made in the aggregate once for all, to be accepted in detail and one by one by such traders as chose from time to time to come forward severally and take advantage of it. The form is against its being an offer in bulk made to any number of several traders and giving rise to a swarm of several contracts as and when they might do the acts which evidence their acceptances. It is that in which communication would be made—whether promise, offer, or mere intimation—to a single promisee or correspondent, viz., the Board of Trade. Its natural meaning is, “we are ready to do business in this sense; make it known and tell traders to come to us and propose business.” However, let this, too, pass. About one thing I am in any case clear. This document is not, as the Carbolic Smoke Ball advertisement was, a request to the readers to do something— to smell the smoke ball or what not—and so qualify themselves to claim the payment held out to them. It did not ask anybody to do anything. In particular, it did not request traders to make forward contracts or to enlarge their businesses, or to answer to their country's cry for pit-props. On this point I think the judgments below exhibit some confusion. At most the offer was this, “to anyone who asks, from now till the end of the war, andc, to have his timber carried at the flat rate hitherto prevailing, we promise that we will do so if and when he asks.” It cannot mean, as has been suggested, “we ask traders to enlarge their commitments, and to such as do so we promise the old flat rate,” nor would such general expansion of business evidence the necessary acceptance or raise a binding contract to keep the old rate in force. I would further point to the difficulty that, if acceptances by traders severally are relied on, the letter must be read as making offers, whose meaning and effect in law will vary according as the consignment which constitutes the acceptance is made in England or in Scotland, although its terms are the same; while, if an aggregate acceptance of an aggregate offer took place, that could not hare taken place in Scotland, but must have arisen in England and have been subject to the English law of consideration.

Secondly, as to the acceptance itself. The publication of a table of rates, if it amounts to a continuous offer to carry at those rates, constitutes an offer which has to be accepted by traders severally and from time to time. The publication of an offer to keep those rates open and unaltered for a specified time is quite a different thing. Every time a trader consigns his goods, he accepts pro hac vice the standing offer of the price, and a bilateral contract arises, by offer and acceptance, on the one hand to carry the consignment for that journey at that price, and on the other hand to pay the price. The other offer is accepted, if at all, once and for all. It is, I venture to think, unilateral in its performance, and is not susceptible of being offered to and accepted by the same trader twice over. If nothing more passes than the tender of a consignment for carriage, then, the first time the tender is made, the offer to keep the rate open and unchanged for the whole time specified is also accepted, if it is accepted at all. Further, I think it is impossible to regard the letter of 2nd August 1916 as incorporating the old flat rate in the offer. That rate was then an existing known thing, and was the subject of a continuing offer already made and lasting till it was retracted. In other words, the letter is not an offer to carry at such-and-such a flat rate whenever it is asked for till the end of the war; it is at most “we offer not to retract our old rate while the war lasts.”

What are the facts here? So far as the pursuers are concerned (and so far as I know the case of all the traders is the same), there is no evidence of any acceptance of the offer except such as arises from each separate act of consigning the timber, but these are acts which had evidenced all along an acceptance of the old unstabilised flat rate for the particular consignment and a simple promise to pay that rate. Why should they mean more after intimation of the letter of 2nd August 1916, and, if they mean more, why should they have that additional meaning only on the first occasion of consigning and never afterwards? On what ground, then, are we to say that an acceptance of the offer to continue the rate has been proved? Nothing new and nothing additional is done, and, as the offer not to retract the rate is accepted once for all, nothing different is done when it is accepted on first consigning timber after the intimation than will be done when all the later consignments are made. The things done are exactly the same on all the occasions. Now, an equivocal and ambiguous acceptance will not do. Full effect is given to each act of consigning timber by treating it as an acceptance of an offer to carry at the proposed rate and a promise to pay that rate. Its meaning is then exhausted. Why should something more be implied, on an occasion when the only additional factor is knowledge of the defenders' offer to stand by the rates till the end of the war? I imagine the answer will be—“The offer gave the trader the advantage and cost him nothing extra; you may trust him then to accept it”; but class characteristics like these are hardly legal proof. At most they raise such a probability as would make a scintilla of real proof suffice, or such a presumption as is said, in the case of a downright promise and not a mere offer, to imply an acceptance from the act of claiming performance, which, of course, does not apply to offers. I confess that I cannot hold that the offer relied on, if an offer it is, was ever accepted, so as to complete a contract; and, as I have said, I do not understand it to be tenable that, if the defenders merely promulgated their intention in terms of a promise, they can be sued, as on a contract, if the so-called offer has received no correlative acceptance.

I pass by the national Pit-prop crisis of which so much has been said. It only comes to this. Pit-props had to be got somehow. This could only be done if someone made an economic sacrifice. The traders were unwilling to risk their money. Accordingly, it was necessary that the railways should sacrifice their receipts, unless they could pass the loss on to the taxpayers. Hence the defenders ought to pay. This may be policy, but I do not call it law.

The remaining point for decision is the duration of the offer. I think it is not possible to read in its words any reference to the Act afterwards passed which fixed the date at which the war was to be deemed to have terminated. Nor does that Act apply to fix the meaning of the antecedent letter. According to the natural sense of words in 1916, the war ended when active hostilities against the Central Powers stopped. The Railway Executive Committee were not thinking of a notional or statutory war thereafter to be fixed. So, too, the “present arrangements” meant the possession taken of the railways under the Act of 1871, and the week to week renewals of the orders for general control. That executive arrangement lasted much longer than was ever contemplated in 1916; but, at any rate, it came to an end when it became merged in the statutory arrangement arising on the passing of the Ministry of Transport Act. The arrangement which that Act created, however, like the older one, was not the same. The Minister was new, although still a colleague of the old one. If he issued his orders, the railways would be obliged to set the old rates aside and charge higher ones, the letter of 2nd May 1916 notwithstanding. They cannot be supposed to have agreed, in the event which happened and while exacting excess sums at the behest of the Minister, to pay back to the traders the amount of that excess, which it was the object of the order to retain in the railway treasury in relief of the Government guarantee of the railways' receipts. The two things can only be reconciled by accepting the new regime of the new Ministry as the termination of the old arrangement which fixed the period for the stabilisation of the rates.

For these reasons I agree with my noble and learned friend on the Woolsack that the appeal should be allowed.

Lord Wrenbury—(read by Lord Carson).—I have had the opportunity of reading, and I agree with, the judgment delivered by Lord Dunedin. The terms found in the letter of the 2nd of August 1916 never became, I think, contractually agreed between the timber owners and the Highland Railway. The appeal in my judgment should be allowed.

Lord Blanesburgh—(read by Lord Carson).—I have reached three conclusions in this case. First, that the 10s. emergency rate, originally quoted in November 1914 and continued by the letter of the 2nd of August 1916, ceased to be operative, at the instance of the respondents, on the 31st of December 1919, the date fixed for its withdrawal by the notice of the 1st of October preceding. Secondly, that, according to the terms of the letter itself, the rate ceased to be operative at the latest on the 10th of January 1920. Thirdly, that in any case it was superseded on the 15th of January 1920 by the tolls, rates, and charges then brought into force by the Minister of Transport. It follows, in my judgment, and for one or other of these reasons, that the respondents' claim in this suit, either altogether or in substance, falls to the ground.

I prefer to deal with the second and third of these conclusions at once. [His Lordship then dealt with the second and third conclusions, and continued]—But I am further of opinion, notwithstanding the apparently definite period for the duration of the rate fixed by the letter of the 2nd of August 1916, that that rate was, on due notice given, withdrawable before the date originally fixed for its termination, and that, as from the 31st of December 1919, it was effectively withdrawn as against the respondents. In other words, the suit fails altogether as a consequence of the first of the three conclusions stated at the outset of this judgment.

It is not, I think, questioned that this would clearly be so if the rights of the parties had to be determined by English law. Now at one time in this suit there was a serious question whether the letter of 2nd August 1916 had any reference at all to the rates on Scottish railways. It has, however, never been doubted that its statements were made with direct reference to the rates on the English railways. How strange it would be in these circumstances if the Railway Executive Committee, using language which permits of no discrimination, had succeeded in committing the Scottish railways to a burden from which the English companies were left exempt! It is, I should suppose, certain that nothing of the kind was intended. It is, therefore, something of a satisfaction to me to find that it has not happened. The appellants, notwithstanding the terms of the letter, had, I am convinced, under Scots law the same freedom of withdrawal on notice reserved to them that the English companies enjoyed by English law.

Had that privilege of the English companies resulted only from the fact that there was no consideration for a promise on their part to continue the rate for any definite period, this statement could not have been made. But that is not the case. The real and primary reason why, if this had been a rate quoted by an English company, it could have been withdrawn against the respondents on the 31st of December 1919, is one dependent upon no specialty of English law, but upon a consideration common to the law of contract of both England and Scotland, namely, that there had not, on the 31st of December 1921, been by the respondents any such acceptance of the offer made as would constitute between them and the company making it any contract at all as to the future.

Here we are at the real point. An acceptance of such a rate so as to affect future relations must have been what I may describe as an acceptance cum onere—one which, being made on the terms that the appellants for the prescribed period should not raise the respondents' flat rate, imported on the respondents' part a promise to pay that rate upon their consignments for the same period, however much for other consignors the flat rate might be reduced. No such acceptance by the respondents is, I need hardly say, suggested. From time to time they tendered their pitwood for conveyance at the published rate. They did nothing more; and I hazard the statement confidently that, if there is one thing which a trader, when he takes that course, neither does nor intends to do, it is to renounce the right he has in respect of his future consignments to participate with other traders in any lowering of rates that may from time to time be operative. The rules as to undue preference and the like, obtaining in relation to railway rates, make it almost unthinkable that any such abandonment would either be asked for or made in such a case as this. But without it there has, in my judgment, been no acceptance by the respondents which is of any use to them in this suit. It is not ad rem that any lowering of the flat rate was unlikely. What is of the essence is that any contract at all here must be one with obligations on both sides in the matter of duration—on the part of the appellants the promise that during the stated period there will be no increase—on the part of the respondents the collateral promise that for the same period there will be for them no reduction.

So far, as will be understood, I have been dealing with the case solely on the footing of contract. None, in my judgment, has been proved.

There was, however, some attempt by the respondents, in the Court of Session, to show that by their actings on the faith of the letter of the 2nd of August 1916 they had established a plea in bar against the appellants. That attempt was not seriously made here; and one need not be surprised when one recalls, in the language of Bell's Principles, sec. 26, the conditions necessary to success in it. Rei interventus “is inferred from any proceedings not unimportant on the part of the obligee, known to and permitted by the obligor to take place on the faith of the contract as if it were perfect; provided they are unequivocally referable to the agreement, and productive of alteration of circumstances, loss, or inconvenience though not irretrievable.” On the facts, success in such a contention was impossible. Accordingly, in your Lordships' House Mr Graham Robertson preferred to base his case upon a contention which, if well founded, would have availed not only the respondents, but each of the other pursuers in the numerous actions which await the result of the present suit. His final contention was that such a letter as that here in question, when once published, could not be withdrawn, and could be founded upon by the respondents tendering pit-props for conveyance by the appellants in accordance with its terms, whether or not they knew until immediately before their tender that the letter had been written or what its terms were, whether or not those terms had been in existence at its date, whether or not it had previously been withdrawn with or without their knowledge. With reference to such a contention, I would only say that, in my judgment, it is subversive of all principle and is unsupported by any authority. It is, I think, quite untenable.

I have thought it right to make these observations on this part of the case because it seemed useful to approach it, in part, from the standpoint of English law. I might, however, have been well content to leave it where it has been left by the noble Viscount on the Woolsack.

I concur entirely in the motion which he has made.

Lord Shaw of Dunfermline (read by Viscount Dunedin).—I agree in the conclusion reached to the effect that this appeal should be sustained, but I do so on the sole ground of the provisions of the Ministry of Transport Act and of the actings of the Minister of Transport thereunder. As to the other point so anxiously debated, it is right that I should intimate that I do not agree with your Lordships, but hold that the view taken by the majority of the Second Division of the Court of Session was correct. Although it will accordingly make no difference to the case in result, I desire to dissociate myself from the opinions delivered on the following matters.

It appears unnecessary and insufficient to rest the rights of Messrs Paterson solely upon a promise to which the railway companies were committed. In my opinion this was a case of contract, constituted by offer and acceptance. The terms of the offer are contained in the letter of 2nd August 1916, from the Railway Executive Committee to the Board of Trade. Under this letter an intimation was made of the decision of the railway companies. It proceeds:—“We are, however, prepared to accept (3), the suggestion made by the Coal Mining Organisation Committee that the present exceptional rates which have been put into force shall continue during the period of the war and for so long after the war as the present arrangements entered into between the Government and the railway companies remain in force.” Two questions arise upon this letter: First, Did it bind the railway companies, including the appellants, it being a letter from the “Railway Executive Committee”? Second, Did it reach, and, if accepted, bind Messrs Paterson?

On the first point I have no manner of doubt that the Railway Executive Committee did represent the railway companies of the country. The period was one of extraordinary emergency during the Great War. The control of the railways had been taken over by the Government, and the existence of the Railway Executive Committee made that Committee a most proper and convenient channel for making public announcements or offers which would not only facilitate the transport of goods but, by lowering the rate of transport, would induce the production of material. This last consideration was of vital importance, and the supply of pit-props to enable mining operations to be continued was an object which could be most efficiently achieved in the opinion of all parties by a moderate flat rate of railway transport. The whole of these things would have been completely vacuous unless the letter of 2nd August 1916 constituted for the producers, namely, not only the coal trade but the timber trade, such terms in amount and in continuance as would make the timber merchants set to work with commercial security. I view not only with doubt but with great disrelish the argument that either the Government or the railways of this country were issuing a ukase inducing extensive and expensive operations in the felling and haulage of timber by landowners and timber merchants, while leaving a loophole open for the withdrawal of the terms of flat-rate transport on the ground that there was no offer made which bound the railway companies.

In the second place, the offer, as I think it was—the offer thus made— was in my opinion accepted, for the rates and for the period set forth, by the actings of Messrs Paterson. They had, as other merchants similarly induced had, to make, and did make, forward contracts so as to be able to supply the amount so greatly needed. The cutting of timber has only to be mentioned to show this, when one considers the remoteness from railway stations; the necessity, it may be, owing to very serious expenses in haulage, of temporary roadways, and the like; and the presentation at the railway stations of timber in a suitable condition for transport. When the first of these cargoes reached the railway stations and was accepted, in my opinion the contract relations of the parties were complete. The offer clearly made in order to be acted upon was acted upon and accepted. I can give no countenance to the argument that the Government acted through committees or departments or subcommittees, being met upon the other side by representative committees of particular trades. The results were probably announced. They reached the traders, and the trader's acted in accordance with the Government's and the railways' wishes, and the traffic was supplied and carried.

There is, in my opinion, no justification for the view that there must be a written contract between the individual trader and the individual railway company before such an arrangement can be treated as validly binding. In Hunter v. The General Accident Fire and Life Assurance Corporation, Limited, Lord Kinnear (at p. 353), although dealing with an insurance contract, stated the general principle in terms which are in themselves clear and which are apt to the present case. “If the offer expressed in the terms of the company's advertisement had been made directly to Mr Hunter as an individual, and he had accepted it in terms for himself, there could have been no question whatever as to the completion of a valid contract… If that be so, it makes no difference, in my opinion, that instead of being addressed directly to an individual it is a general offer made to all persons to whose knowledge it may come, which may be accepted for himself by anyone who receives it. It is suggested that this is making a contract by an advertisement, but it is none the worse for being an advertisement if it is a distinct and definite offer unconditionally accepted. The instances of such a contract are familiar. They are to be found in the books, and perhaps the most common example is a contract made by advertisement undertaking to give a definite reward for the performance of certain services. It is held that the offer is accepted by the person who performs the services, and thereupon makes a claim, in respect of his having done so, to the reward in terms of the offer. But the principle is quite clear—that, when a general offer addressed to the public is appropriated to himself by a distinct acceptance by one person, then it is to be read in exactly the same way as if it had been addressed to that individual originally.” It is not denied that if Messrs Paterson had received from the Highland Railway Company a contract note, and if the Railway Company had by despatch and delivery of their goods accepted the goods making charges as per their offer, the contract would have been complete. It is, in my opinion, equally complete by the general notice to the Board of Trade having, as was the purpose of it, reached the particular trader through the operations of the various committees, as was clearly set forth in Lord Ormidale's judgment. In being acted upon, and business being conducted as described, it was not open either to the Government or the railway companies, except by authority of Parliament, to back out of that transaction. To do so would have been not only a breach of honour but a breach of law.

The question that remains is, What is the period of that contract? In its terms it is that the exceptional rates “shall continue during the period of the war and for so long after the war as the present arrangement entered into by the Government and the railway companies remains in force.” That arrangement was simply and plainly Government control. The offer made was accordingly for the period of the war and Government control thereafter. Those making the offer knew perfectly well its value and how inducive it would be to achieving the object at which they aimed. They themselves say in the same letter:—“We feel that this concession would overcome any prejudices that woodland owners might have in felling their timber due to the uncertainty of the rates being changed after the period of the war.” I have thought it right to indicate as clearly as I can the view which I entertain on the unquestionably important point as to the contract relations of these parties.

I now come to consider the situation which they occupy as affected by the passing of the Ministry of Transport Act (9 and 10 Geo. V. cap. 50). [His Lordship then proceeded to consider the effect upon the contract of the Ministry of Transport Act, 1919, and stated his reasons for holding that the effect of the Act and the order of the Minister of Transport was to terminate the contract as at 15th January 1920.] On the head of the argument as to the Ministry of Transport Act, I am accordingly in agreement with the judgment of my noble and learned friend on the Woolsack, and I think that the appeal succeeds.


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