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From C. A. (England). (

House of Lords.

March 18.

SOUTH AFRICAN TERRITORIES v. WALLINGTON. (a.) Company Debentures Payment by instalments Specific performance of agreement— Agreement to lend money-Damages.

Specific performance of a contract to lend money will not be granted, and this is equally so where the agreement on the one side is to lend money for a term of years, and on the other to give the lender certain specified security for his loan.

Decision of the Court of Appeal (45 W. R. 467, [1897] 1 Q. B. 692) affirmed.

This was an appeal by the plaintiff company from a judgment of the Court of Appeal (Lord Esher, M.R., Lopes and Chitty, L.JJ.), 45 W. R. 467, [1897] 1 Q. B. 692, which reversed an order of Wright, J. The facts are given at length in Lord Herschell's judgment.

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to suggest any serious damages in this case, and the tacit admission of the parties, by their declining to consider the question of a new trial upon payment of costs, renders it unnecessary for me to do more than to say that in this case justice has been done by the Court of Appeal reversing the decision of the learned judge below.

I think it right, however, to add that if any serious right were involved, or if it was reasonably possible that injustice had been done, I should have felt myself at liberty to give my opinion in favour of a new trial.

I agree that in this case the parties had in a great measure themselves to blame, but I think the blame was not entirely theirs, and where a miscarriage has taken place by errors in procedure, I think the proper remedy is to make the party in default pay for his error in the shape of costs, and not to deprive him of important rights, if any such exist. course, where error in procedure leads to altering the position of the other litigant party, it may well be that mere payment of costs will not do justice, and in such cases the party in default must suffer. But, speaking generally, a blunder in procedure, if it can

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Bray, Q.C., and Gore Browne, for respondent.

March 18.-Lord HALSBURY, L.C.-The forms which have been contrived for the business of jointstock companies, and which, when applied to their proper purposes, are convenient, are nevertheless somewhat calculated to mislead when their mere language is regarded. The applicant for debentures on the face of the instrument contracts to pay something, but the real nature of the whole transaction is an agreement by the applicant to lend money at certain interest, and the action in this case was in truth mainly, if not altogether, directed to compel the intending lender to perform his contract to lend, which undoubtedly he had refused and neglected to do.

With respect to the claim for specific performance, a long and uniform course of decision has prevented the application of any such remedy, and I do not understand that any court or any member of any court has entertained a doubt but that the refusal of the learned judge below to grant a decree for specific performance was perfectly right. But, of course, in this, like any other contract, one party to the contract has a right to complain that the other party has broken it; and if he establishes that proposition he is entitled to such damages as are appropriate to the nature of the contract.

In this case, as I have said, the contract was to lend money. Referring to the question of damages, the amount of interest to be paid for the loan, and the fact that £80 was under the contract itself forfeited to the company for the non-performance of the contract in its entirety, render it difficult to see what substantial damages could have been recovered, and I regret that under the circumstances it should have been thought advisable to appeal to your lordships in a case which, upon a review of the facts, does not appear in any view of it to have been worth the expense necessarily involved in such an appeal. Your lordships were informed that the action took seven minutes to try, with the result that it has now been to two courts of appeal, and, but for what I am about to say, might have resulted in a new trial. Upon a careful review, however, of the facts, I have come to the conclusion that it would be impossible (a.) Reported by C. H. GRAFTON, Esq., Barristerat-Law,

receives its most appropriate penalty in being made the subject of an order for costs.

I think, therefore, in this case that the appeal ought to be dismissed, and dismissed with costs; and I move your lordships accordingly.

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Lord WATSON. The appellant company, in September, 1895, invited tenders for a loan of £75,000, to be secured by the issue of first mortgage debentures for £50, and bearing interest at 6 per cent, repayable with a bonus of £5 10s. upon each debenture on the 30th of September, 1900. whole floating assets of the company were to be conveyed to trustees for behoof and for security of the bondholders. Ten per cent. of his advance to the company was to be paid by the subscriber upon application for an allotment and the balance in four subsequent instalments.

The respondent applied for an allotment of sixteen debentures, representing an advance of £800, and with his application remitted the sum of £80. His offer was duly accepted and the remittance retained by the company. The respondent having declined to make any further advance, the present action was brought against him by the company for payment of a capital sum which they claimed (1) as in specific performance of his obligation, (2) as the balance of the price which he had undertaken to pay for the debentures, and (3) as damages which they had sustained by his breach of contract

The only engagement made by the respondent with the company consisted in a promise to advance money to them in loan; and it is settled in the law of England that such a promise cannot sustain a suit for specific performance. It is equally clear, in my opinion, that the obligation of the company to issue mortgage bonds against the loan did not in any way alter or affect the character of the transaction or give the company any right to sue as for the price of an article sold by them which they were ready to deliver. The only remedy open to the company was by action against the respondent for any loss or damage which they might sustain through his breach of promise.

The case was tried before Wright, J., who gave the company a decree as for the price of the debentures which the respondent had agreed to take up. I cannot say that the trial was satisfactory. The proceedings were chiefly occupied by a discussion between the learned judge and the respondent's counsel, in the course of which the former indicated the terms of the

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order which he meant to pronounce. No evidence of damage was tendered by the appellant company.

An appeal was taken by the respondent, upon a notice of motion that the decree of Wright, J., should be reversed or varied, and that judgment should be entered for him or a new trial allowed. At the hearing of the appeal, counsel for the company urged the first and second of the claims made by them and did not refer to their claim of damages. After the judgment of the Appeal Court was delivered reversing the order appealed from and entering judgment for the respondent, counsel, in the absence of the head of the court, moved two Lords Justices to remit the case for trial of the question of damages. Their lordships declined to entertain the application.

On the hearing of this appeal, counsel for the company again pressed upon your lordships the desperate arguments which they had addressed to the Court of Appeal, and moved your lordships to send back the case in order that the company might have an opportunity of proving damage. I do not doubt that it is within the discretion of the House to grant or refuse that motion, but I am very clearly of opinion that, in the circumstances of this case, that discretion ought not to be exercised in favour of the appellants, and that the order appealed from ought to be affirmed with costs.

Lord HERSCHELL.-This action was brought by the appellant company to obtain specific performance by the defendant of a contract to take certain mortgage debentures, or in the alternative to obtain payment of the balance of the price of the debentures or damages.

The appellant company issued a prospectus offering to the public an issue of £75,000 6 per cent. first mortgage debentures of £50 each repayable on the 31st of December, 1900. It was stated that the allottees of this issue would have the right to exchange them at par for an equal amount of shares at any time within two years after the 31st of December, 1896. The debentures were to be payable -10 per cent. on application; 15 per cent. on allotment; 25 per cent. two months after allotment; 25 per cent. four months after allotment; and 25 per cent. six months after allotment.

The defendant in September, 1895, applied for the allotment to him of sixteen of the debentures, and agreed to take such debentures, or any less number that might be allotted to him, on the terms of the prospectus. The appellant company accordingly on the 15th of October, 1895, allotted to the defendant sixteen debentures in the company, and the defendant paid the sum of £80, being the 10 per cent. required by the contract. In his letter of application the defendant in terms agreed to pay the further instalments due thereon, in accordance with the terms of the prospectus.

The defendant having refused to make any further payments the present action was brought on 6th of March, 1896, when all the instalments except the last, had become due.

The action came on for trial before Wright, J., and the learned judge held that the claim for .specific performance could not be sustained, but gave judgment for the plaintiffs on the ground that a debt had been created by the defendant's promise to pay contained in his letter of application. Judgment was accordingly entered for the plaintiffs for £520 and costs. From this judgment the defendant appealed, giving notice that he should move that the judgment be reversed, and that in lieu thereof judgment should be entered for the defendant, or a new trial had. The Court of Appeal reversed the judgment of the court below, and ordered that judgment

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should be entered for the defendant with the costs of the appeal and the costs of the action incurred subsequent to the date of the payment into court by the defendant of the sum of 5s.

I do not think it is open to any doubt that a person with whom a contract to lend money has been entered into cannot obtain specific performance of that contract. All the learned judges who have considered this case have been of that opinion, and none of the authorities cited afford any real support to the contrary view.

But for the fact that Wright, J., arrived at another conclusion, I should have though it equally clear that the sums of money constituting the instalments which the defendant agreed to pay did not constitute a debt. It was argued that the defendant had agreed to purchase certain debentures of the company, and that the moneys sought to be recovered were the price of the debentures so agreed to be purchased. I think this is a fallacy. The transaction was not in its nature a contract of purchase, it was an agreement on the one side to lend money for a term of years, and on the other side to give the lender the specified security for his loan. I am at a loss to see how an agreement of this description can create a debt from the lender to the borrower.

So far the case is free from any difficulty, but the alternative claim of damages for breach of the contract remains to be considered. At the trial no evidence was given to show that the plaintiff's had, in fact, sustained any damage by the breach of contract, and that the 5s. paid into court over and above the £80 paid on application was not sufficient to compensate the plaintiffs for any damage they had sustained. By the terms of the prospectus the failure to pay the subsequent instalments rendered the £80 payable on application liable to forfeiture. Wright, J., in the course of a discussion initiated by the learned judge during the opening address of the plaintiffs' counsel, said: "In order that an end may be made of the matter, if I am wrong on one point and right on the other, can you suggest that the damages, if it is damages, should be less than the amount which he agreed to pay?" In answer to this the learned counsel for the defendant pointed out that though the plaintiffs were deprived of the use of the money for four years, they would have had, according to the prospectus, to pay about 8 per cent. for its use, and that they had got the £80 deposit. The learned counsel for the plaintiffs made no observation upon this, and the learned judge then gave judgment.

I think that in strictness the counsel of the plaintiffs should have called attention to the fact that he was prepared to tender evidence in proof of actual damage sustained by the plaintiffs, if he wished to reserve the benefit of it supposing the learned judge were wrong in his view as to the measure of damages. I can quite understand that he was embarrassed by the course taken by the learned judge in bringing the trial at so early a stage to a summary conclusion. I think it is to be regretted that, no doubt with a view to save the public time, the learned judge interposed at so early a period, and did not let the trial take its natural course. At the same time, where a learned judge has intimated, as Wright, J., did, a desire that an end might be made of the matter, in case he should be wrong, I think the proper course is, if counsel has any evidence which in that view might be material, to mention the matter to the judge. Nevertheless, if the learned counsel for the plaintiffs had, in the Court of Appeal, called the attention of that court to the fact that, supposing the learned judge in the court below to be wrong, the amount of damages to which they were entitled had been left undetermined, I

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think, considering the course which the case took at the trial, the Court of Appeal might quite properly have granted a new trial if they thought a substantial point had been left untried. Their attention, however, it is admitted, was never called to the fact that the plaintiffs were prepared to offer evidence as to the amount of damage sustained, and it was not urged on their behalf that if the judgment in their favour was not allowed to stand, judgment should not be entered for the defendant, but only a new trial be ordered. It was indeed stated at the bar that the learned counsel for the plaintiffs had expressly abandoned any such point, but I do not insist on this. On the materials before them I do not see how the Court of Appeal could have given any other judgment than the one they gave. How could they order a new trial when it was not brought to their notice that there was anything to try, or that there was any further evidence forthcoming?

After judgment had been delivered, the learned counsel for the plaintiffs for the first time asked that the order should be for a new trial, and stated that they wished to give evidence as to damages. I do not doubt that the court might even then, on such terms, if any, as they thought fit, have made an order for a new trial instead of entering judgment for the defendant. But in my opinion a party is not entitled to wait until judgment has been delivered against him, and then for the first time raise such a point.

If he has obtained judgment in the court below, and the opposite party moves to substitute a judgment in his favour, the respondent, if he intends to maintain that even though he cannot maintain his judgment, the other party is at most entitled to something less than a judgment in his favour, ought, I think, to make the point in the course of his argument. I cannot see that his contention that the court below rightly decided would be in the slighest degree weakened by his contending, as an alternative, that the appellant was entitled at the most to something less than the full relief he claimed.

I have thought it right to say so much because I am unwilling to afford any countenance to the view that a party is entitled to wait until judgment has been delivered before presenting such a contention. It would tend to lax procedure, and frequently to great inconvenience.

For the reasons I have expressed I do not think the plaintiffs are entitled, as of right, to demand that your lordships should vary the order of the court below, and grant a new trial. At the same time, I do not doubt the power of this House to make such an order on suitable terms, where, in its opinion, the ends of justice so require. The learned counsel who appeared for the plaintiffs at the bar, stated, in answer to a question put to them, that they did not desire a new trial if it were to be granted only on payment of costs. I do not feel it necessary therefore to inquire whether the course which the case took at the trial would have rendered this a proper order in the present case.

It may be well that I should add that I do not believe the plaintiffs suffer any prejudice by not obtaining a new trial. In view of the nature of the contract broken, and the measure of damages applicable to it, I am satisfied that they could not have established a right to anything beyond what they have already received.

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rejected by the Court of Appeal. The third has not been considered as yet.

It is quite plain that the contract made by the offer of these debentures, and the acceptance of that offer, is nothing more or less than a contract to borrow and a contract to lend so much money payable by instalments. The essential character of the transaction is not altered either by the circumstance that the creditor in a certain event is to have the option of exchanging his position for that of a shareholder or by the complicated nature of the arrangements made for the lender's security.

That specific performance of a contract to lend money cannot be enforced is well established, and is obviously so wholesome a rule, that it would be idle to say a word about it.

As regards the second head of claim it is enough to observe that there is no contract at all to pay except as incidental to the contract of loan. The term price" applied to such a transaction as this is quite out of place. To order payment, as a debt or by way of damages or otherwise of an amount equal to the sum of the remaining instalments, is to enforce the agreement against one of the parties to the contract and to set the other free-free from any obligation to pay interest, and free, too, from any obligation to repay the principal. That would be a very one-sided sort of specific performance, contrary to all precedent, and in the result plainly unfair.

So far there is no difficulty and there can be no room for doubt. But the learned counsel for the appellants raised a point in connection with the third head of claim which requires rather more consideration. That claim, as they said, and said truly, had not been dealt with at all. It was not disputed that the contract has been broken. There was therefore, prima facie, a case for damages. That there were no materials before the court for assessing the amount of compensation was not, they said, wholly their fault, and so they asked this House, under the circumstances, to allow a new trial on that one point.

If I thought there had been any miscarriage of justice-if I thought that, owing to some accident or to anything but the neglect or the prudence of the appellants themselves, they had been shut out from the trial of a question which they seriously desired to try, I should for my part have thought that the indulgence ought to be granted assuming that it could be granted on terms not unfair to the other side. But I think there is no substance in this claim; and I much doubt whether the appellants ever really meant to put it forward, except as a sort of cover in case of disaster, or as a justification or excuse for embarking on litigation of an experimental character.

Thinking, as I do, that there is nothing substantial in the claim for damages, and that the appellants, if they keep the deposit, will be more than compensated for any loss which they could possibly prove, and thinking too, that this claim for damages may have been advisedly not pressed before the Court of Appeal, and seeing that it was not put forward until after judgment was given, I am of opinion that the application for a new trial ought to be rejected. To admit such a claim would, I think, be a very dangerous precedent.

I think the appeal should be dismissed altogether, and with costs.

articles belonging to them. Captain Foote, of the Royal Inniskillings, who was adjutant of the regiment and in charge of the volunteer battalion, was called up to the tent where the felony was supposed to have been committed, and, having investigated the matter, ordered the plaintiff under arrest and into the custody of one of the volunteers present, to be taken to the Shorncliffe Railway Station with the baggage guard of the regiment; and he ordered that the plaintiff should be taken under escort and arrest in the special military train which on that day was about to take the regiment to Boxmoor Station; and he also ordered that upon arrival there the plaintiff should be taken under arrest and handed over to the police authority at Hemel Hempstead, which is about two miles from the Boxmoor Station and is the plaintiff's home. Under the order of Captain Foote the plaintiff was placed under arrest and into the custody of one of the volunteers of the regiment, and was so taken to the Shorncliffe Station with the baggage guard of the regiment, the plaintiff as well as the volunteer who had him under arrest being in uniform and under arms. Shortly after the plaintiff reached the Shorncliffe Station the regiment under arms and under command arrived there with the three defendants in the ranks. They were then told off and ordered by their superior officer, pursuant to the order of Captain Foote, to escort the plaintiff under arrest in the special military train about to start for Boxmoor, and upon arrival there to take him under arrest to Hemel Hempstead and hand him over to the police authorities there. This order the three defendants obeyed, both they and the plaintiff being all the time in uniform and under arms. The regiment, which had formed up in marching order in camp at Shorncliffe, was not dismissed until after its arrival at the Boxmoor Station, and the three defendants were not dismissed until the orders of Captain Foote had been carried out and the plaintiff handed over to the police authority at Hemel Hempstead, to which place they had marched the plaintiff from Boxmoor Station in uniform and under arms by a side road from the station.

The learned judge, against whose judgment, as also against the verdict of the jury as to damages, the three defendants appeal, has entered judgment for the plaintiff for £300, having first amended the statement of claim, which claimed £200, by altering the claim into one for £300, the result being that these three defendants, who are working-men and of the same rank of life as the plaintiff (he being a working tailor and the others journeyman painters and a carpenter), have been mulcted in the sum of £300 for simply obeying the orders of their superior officer. If they had disobeyed those orders they would, I apprehend, have found themselves in a perilous position by reason of section 21 of the Volunteer Act, 1863, and of section 20 of the Army Act, 1881.

I now proceed to inquire whether the law is such as to sanction a judgment for false imprisonment at all, no matter for what damages, against the three defendants in the above circumstances. There can be no possible doubt that upon the morning of the 8th of August, 1896, Captain Foote, in the camp at Shorncliffe, gave a lawful order concerning a soldier" engaged in military service for a military offence. The offence for which the plaintiff was placed under arrest was cognizable by either military or civil authority. That the plaintiff when the order was given was a soldier subject to military law is beyond dispute. Section 176 of the Army Act, 1881, and article 374 of the Regulations for the Volunteer Forces are conclusive as to this. But it is argued for the plaintiff that, although this might be so, the order to the three defendants given at the Shorncliffe Station by their

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superior officer pursuant to the order of Captain Foote to escort the plaintiff under arrest with his regiment from Shorncliffe Station to Hemel Hempstead was illegal, because the plaintiff and the three defendants had then ceased to be subject to military law and had become civilians, which, it is said, they became immediately they left the camp, and that, therefore, the three defendants could only justify the imprisoning that is, escorting the plaintiff under arrest pursuant to orders from Shorncliffe Station to Hemel Hempstead-by proving that a felony had in fact been committed, and that they had reasonable cause for suspecting that the plaintiff had been guilty of it, and this fact the three defendants had failed to establish. Now, first of all, did these four menthat is, the plaintiff and the three defendants-become civilians either when they left the camp in the circumstances in which they left it or when they left the Shorncliffe Station with the regiment, all being in uniform under arms, and under command in the military train? It has been held by the learned judge that upon the true construction of the statutes they became civilians when they left the Shorncliffe camp, and it is argued that, as Captain Foote had only a jurisdiction limited to such time as military law existed, the three defendants cannot justify under an order which, though good so far as the primary arrest was concerned, was bad so far as it ordered the keeping of the plaintiff under arrest, for, as to this, it was in excess of jurisdiction. In my opinion the War Office order of the 22nd of April, 1896, above referred to, covered and included the whole of Saturday, the 8th of August, 1896. It was argued that it did not. Inasmuch as it must be conceded that the order covered some part of the day, What part of it did it cover if it did not cover the whole day? No answer was given to this. In my opinion the order covered and included the whole of Saturday, the 8th of August, in the same way as it covered the whole of Saturday, the 1st of August, 1896. So soon as the Bedfordshire volunteers fell in under arms and under command on that day as a regiment to proceed to the camp at Shorncliffe to take part in military training there with regulars, in my opinion from that time they became subject to military law, and remained so subject until they were dismissed upon Saturday, the 8th of August, 1896. I can find in the War Office order no fraction or part of a day as distinct from the whole day as being only covered by the order, but, on the contrary, I find that, by section 573 of the Regulations for the Volunteer Force, an additional allowance of 4s. per day is granted to a volunteer private to cover time occupied in joining and quitting camp, which points to the day being entire. If the Bedfordshire regiment of volunteers had remained in camp at Shorncliffe the whole of the 8th, during the whole of that day it would have formed part of the Home Counties Volunteer Brigade at training and exercise with regulars, even though during that day the regular forces might have been leaving the camp, and the camp itself was being dismantled. If all the regulars had left the camp on the morning of the 8th, leaving the Bedfordshire Regiment still in camp, can it be said that the regiment did not continue under military law whilst it remained in camp? I heard no suggestion in argument that the regiment became a regiment of civilians whilst in camp; then what becomes of the argument of the learned counsel for the plaintiff that the regiment became a regiment of civilians, though under arms and under command, the moment it became a unit by itself. If the regiment had been dismissed in camp and each volunteer had had to find his own way to his home as best he could, this would have been another matter, but is not the present case. By section 176, sub-section