1861.

COOK

V.

WRIGHT.

expenses incurred under the last mentioned section shall be repaid by the owners of the lands therein mentioned, and shall be recoverable from the owners or occupiers in the same manner as is provided with respect to the recovery of expences under the provisions for insuring the execution of works required to be done by the owners and occupiers of lands."]

Cur. adv. vult.

BLACKBURN J. (July 9th) delivered the judgment of COCKBURN C. J., WIGHTMAN J. and himself; CROMPTON J. having left the Court before the argument was concluded.

In this case it appeared on the trial that the defendant was agent for a Mrs. Bennett, who was non-resident owner of houses in a district subject to a local Act. Works had been done in the adjoining street by the Commissioners for executing the Act, the expences of which, under the provisions of their Act, they charged on the owners of the adjoining houses. Notice had been given to the defendant, as if he had himself been owner of the houses, calling on him to pay the proportion chargeable in respect of them. He attended at a Board meeting of the Commissioners, and objected both to the amount and nature of the charge, and also stated that he was not the owner of the houses, and that Mrs. Bennett was. He was told that, if he did not pay, he would be treated as one Goble had been. It appeared that Goble had refused to pay a sum charged against him as owner of some houses, and the Commissioners had taken legal proceedings against him, and he had then submitted and paid, with costs. In the result it

was agreed between the Commissioners and the defendant that the amount charged upon him should be reduced, and that time should be given to pay it in three instalments; he gave three promissory notes for the three instalments; the first was duly honoured; the others were not, and were the subject of the present action. At the trial it appeared that the defendant was not in fact owner of the houses. As agent for the owner he was not personally liable under the Act. In point of law, therefore, the Commissioners were not entitled to claim the money from him; but no case of deceit was alleged against them. It must be taken that the Commissioners honestly believed that the defendant was personally liable, and really intended to take legal proceedings against him, as they had done against Goble. The defendant, according to his own evidence, never believed that he was liable in law, but signed the notes in order to avoid being sued as Goble was. Under these circumstances the substantial question reserved (irrespective of the form of the plea) was whether there was any consideration for the notes. We are of opinion that there was.

There is no doubt that a bill or note given in consideration of what is supposed to be a debt is without consideration if it appears that there was a mistake in fact as to the existence of the debt; Bell v. Gardiner (a); and, according to the cases of Southall v. Rigg and Forman v. Wright (b), the law is the same if the bill or note is given in consequence of a mistake of law as to the existence of the debt. But here there was no mistake on the part of the defendant either of law or fact. What he did was not merely the making an erroneous (2) 11 C. B. 481.

(a) M. & Gr. 11.

1861.

COOK

v.

WRIGHT.

1861.

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V.

WRIGHT.

account stated, or promising to pay a debt for which he mistakingly believed himself liable. It appeared on the evidence that he believed himself not to be liable; but he knew that the plaintiffs thought him liable, and would sue him if he did not pay, and in order to avoid the expence and trouble of legal proceedings against himself he agreed to a compromise; and the question is, whether a person who has given a note as a compromise of a claim honestly made on him, and which but for that compromise would have been at once brought to a legal decision, can resist the payment of the note on the ground that the original claim thus compromised might have been successfully resisted.

If the suit had been actually commenced, the point would have been concluded by authority. In Longridge v. Dorville (a) it was held that the compromise of a suit instituted to try a doubtful question of law was a sufficient consideration for a promise. In Atlee v. Backhouse (b), where the plaintiff's goods had been seized by the excise, and he had afterwards entered into an agreement with the Commissioners of Excise that all proceedings should be terminated, the goods delivered up to the plaintiff, and a sum of money paid by him to the Commissioners, Parke B. rests his judgment, p. 650, on the ground that this agreement of compromise honestly made was for consideration, and binding. In Cooper v. Parker (c) the Court of Exchequer Chamber held that the withdrawal of an untrue defence of infancy in a suit, with payment of costs, was a sufficient consideration for a promise to accept a smaller sum in satisfaction of a larger.

(a) 5 B. & Ald. 117.

(b) 3 M. & W. 633.

(c) 15 Com. B. 822.

It

In these cases, however, litigation had been actually commenced; and it was argued before us that this made a difference in point of law, and that though, where a plaintiff has actually issued a writ against a defendant, a compromise honestly made is binding, yet the same compromise, if made before the writ actually issues, though the litigation is impending, is void. Edwards v. Baugh (a) was relied upon as an authority for this proposition. But in that case Lord Abinger expressly bases his judgment (pp. 645, 646) on the assumption that the declaration did not, either expressly or impliedly, shew that a reasonable doubt existed between the parties. may be doubtful whether the declaration in that case ought not to have been construed as disclosing a compromise of a real bonâ fide claim, but it does not appear to have been so construed by the Court. We agree that unless there was a reasonable claim on the one side, which it was bonâ fide intended to pursue, there would be no ground for a compromise; but we cannot agree that (except as a test of the reality of the claim in fact) the issuing of a writ is essential to the validity of the compromise. The position of the parties must necessarily be altered in every case of compromise, so that, if the question is afterwards opened up, they cannot be replaced as they were before the compromise. The plaintiff may be in a less favourable position for renewing his litigation, he must be at an additional trouble and expence in again getting up his case, and he may no longer be able to produce the evidence which would have proved it originally. Besides, though he may not in point of law be bound to refrain from enforcing his rights against third persons during the continuance of (a) 11 M. & W. 641.

1861.

COOK

V.

WRIGHT.

1861.

Сooк

v.

WRIGHT.

the compromise, to which they are not parties, yet practically the effect of the compromise must be to prevent his doing so. For instance, in the present case, there can be no doubt that the practical effect of the compromise must have been to induce the Commissioners to refrain from taking proceedings against Mrs. Bennett, the real owner of the houses, while the notes given by the defendant, her agent, were running; though the compromise might have afforded no ground of defence had such proceedings been resorted to. It is this detriment to the party consenting to a compromise arising from the necessary alteration in his position which, in our opinion, forms the real consideration for the promise, and not the technical and almost illusory consideration arising from the extra costs of litigation. The real consideration therefore depends, not on the actual commencement of a suit, but on the reality of the claim made and the bona fides of the compromise.

In the present case we think that there was sufficient consideration for the notes in the compromise made as it was.

The rule to enter a verdict for the plaintiff must be made absolute.

Rule absolute.