THE MOTUKAIKA BLOCK.

Timaru Herald, Volume XIC, Issue 13355, 3 August 1907, Page 6

THE MOTUKAIKA BLOCK.

APPEAL COURT JUDGMENT. (Special to H^rakL^ Following is the Ml test of the Appeal Court* judgment (delivered through Mr Justice Dennbton) in the Mctukaika cas~ JBelcber and Chapman v. Mackenzie and Scott) : The facts of this case are fully set out in the judgment, in the Court below, and are to a gwat extent undisputed. The respondents: who were the plaintiffs m the Court below, and whom it will be convenient to can the vendors, bought, towards the end of 1904, a block of land, part of a larger block, from the Elworthy estate. It was uTGurveyed, and was bought as 7780 acres, with a provision for adjustment. It was bought for farming purposes, and was occupied and improved by the vendors. In llarch, 1905, thev were approached byone Console, a land agent, who asked them if they would sell the land. They a* first declined, bat later consented to disruss terms should be produce a customer. Creebie ultimately brought the. vendor and the appellants (defendants in the Court below, whom it will b? convenient to call the purchasers) together, and after inspecting the land on more than one occasion, the parties, after considerable m-gotiation, signed, on 22nd December, a written agreement in the following term* "To Messrs T. W.. R., and J. it. Bekher and R. W. -Chapman, "Dear Sirs--,—We hereby offer to jell yon all our live and dead -stock, furniture," implements, chattel*, working plant, and things ;(as approximately shown on the list alreadv supplied) on the Motukaika Estate for the sum of £BOOO payable as follows, £SOO cash. £4OCO 3rd January 19C6. balance 25th March 1906, all unpaid purchase-money to bear interest from Ist Januarv 1906, at 4£ per cent "The." vendors guarantee there are not lets than 3950 ewes on the estate, and that they are coming 8-tuoth (except about b0 purebreds) with 90 per cent of lambs; also that there are 100 wethers, 68 rams, and 67 head of cattle (including one cow). Purchaser to be handed over all wcol already shorn or its proceeds from shed door. — Yours truly, S. Mackenzie, James Scott. "We accept this offer., 22nd December, 1905.. R. W. Chapman, T. W. Bekher, R. Belcher*, J. R. Belcher (per T. W. Belcher)" This agreement was varied on zotu March, 1906, as follows: "In lieu of the amount payable on this date nnder the within agreement (of 22nd December, 1905) it is. agreed that the sum of Ten Thousand Poundfi (£3500-for Stock and £6500 for Land) shall be paid to-day arid the balance within one month aft'r the Certificate or title has been obtained (after all plans including Mr Hunt's now in progress have bfen deposited). Th? execs.- - or deficiency of area to !>• paid'-format the rate of Six Pounds per acre as- wr.hin provided, the prrrchasen- to pay nil excera of land or moitgagces tax Mackenzie and Scott may b? ca!l?d upon to pay by rear-on of their "owning this land over and above £30.000 unpaid purchase money. Rate of Interest not to be. disturbed. The> Purchasers have the right to sell the stock atony time. The other terms of the agreement (mutatis mutandis) to remain unaltered. "Dated at Timaru this 26th March, 1906. " "(Signed) R. W. Chapman, (signed) J. R. . Belcher, (signed) T. W. Belcher, (signed) R. Bekher, per (signed) T. W. Belcher." Between the date of these two agreements the purchaeira had the land survey«d, and discovered that a block of tussock land, of inferior value to the rest of the land, which both parties had, at the time of the first agreement, believed and assumed to be 1200 acres in area, was in fact a little they wrote to the vendors suggesting that they were entitled to some compensation for"this inferiority in quality of part of the ..state. The vendors declined to recognise this claim, but- offered to rescind the contract and to take back the land, an offer which was declined by the purchaser.--. After the execution of the second agreement in March 1906, a good deal of correspondence passed between the Solicitors of the parties, and on the 9th June, the purchasers* Solicitors wrote that the purchasers were not prepared to complete until the question as to the alleged liability • of the vendors on the claim for compensation had b?en determined, and suggesting that the- vendors should commence an action. On 23rd July the same Solicitorswrote that if the vendors wonld commence an action for specific performance they (the Solicitors-) wonld assist them by waiving anv technical defence. After sonf further immaterial corrri-pondence th? writ in thN iiftinn was issued claiming specific performance of th; contract, as varied, and payment of th? balance of the pun-has. 1 moi;< y. To this the purchaser.* filed a defence admitting the contract, and setting up th." following defence : •"Tim defendants by t'.it-ir Solicitor Hviiry Osborne- DevenLdi ?de;>.r< s. say: "1. They admit th* alksratrnns contained in paragraphs 1 and 2 of th;. Statement of Claim. "2. I'pmt the negotiations for the contract of sale .-:nd nun-has-' mentioned in th-.-Ftatt-nvnt of Claim the plaintiff-s reprcsen-T--il [hat th" *«tat:' Iw-liided in such contract contained no more than 1200 acres of

tussock land being land of greatly value to the rest of the estate and that such representation was made by the plaintiffs with a view to induce the defendants to enter into the contract mentioned in the Statement of Claim and to purchase the said land "and the defendants relying upon the truth of the aforesaid representation did enter into such contract and did purchase the said land. "3. That after entering into the aforesaid contract the defendants have discovered that the said estate comprises an area of tussock land largelv in excess of 1200 acres and that- the said representation was in fact untrue. "4. In entering into the aforesaid contract and in agreeing to give the price for the said estate mentioned in the contract the defendants were greatly influenced by and acted upon the aforesaid representation that the said estate contained no more than 1200 acres of tussock land and the defendants would not but for such representation have entered into such contract for the purchase of the said estate at so high a price as that mentioned in the aforesaid contract. "5. The defendants are willing to perj form the aforccaid contract of sale subject I to a reasonable compensation deduction or i allowance being made in respect of the aforesaid falss representation and the defendants sav that a reasonable compensation or allowance or deduction for the same from the purchase money under the said contract is the Gum of Three thousand six hundred and sixty-eight pounds." They also eotinterclaimed on the same facts as constituting s* warranty in the following terms: '.'The defendants by their solicitor by wav of counterclaim say:— "1. They- rely upon the contracts set outout in paragraphs! and 2 of the Statement of Claim and repeat the allegations therein contained in this counterclaim." The case was tried at Timaru by hi* Honour Mr Justice Chapman who, after consideration, gave judgment- for the plaintiffs, the vendors, on tlie claim and counterclaim. From this judgment the presentappeal is brought. The first question to be considered is whether the vendors did in fact make the representation and give the guarantee or warranty as set out" in the [statement- of defence and Counterclaim. As to this there iii a- considerable contradiction in the evidence. The purchasers relied at the trial on a guarantee alleged to have been given to them by Corsbie on the authority of the vendors. "The learned Judge in the Court below held that, while there was cvidene given by Corsbie and by the purchasers showing that Corsbie, in his natural -eagerness to bring olf a sale, used some such expressions, he thought it highly improbable that he had any authority from the vendors or cither of them to give any guarantee. With this we entirely agiree. Apart from the definite denial of the vendors at- the trial, and their instant and unphatic denial when Corsbie* s written statement- of such authority was first communicated to them, we think it most improbable that, at- the early stage of the negotiations' at which these guarantees were ■sain) to have been first authorised and given any question of guarantee could have been in*tbt> minds of the vendors. Nor do we think that the existence of such a guarantee is compatible with that part of the letter of 28th October from Corsbie to Mackenzie (to which we shall again refer) in relation to this tussock block. The terms of that letter make it also most improbable thatany guarantee by Corsbie could, after its date, have been" authorised, - or could have been believed to have been authorised, by the vendors. Assuming that it was without the authority of the vendors, counsel for the purchasers very properly admitted that any guaiantee by Corsbie, if such was given, could be admitted only as having a possible bearing on the after conduct of'the purchasers. The real, matter in dispute is whether the vendors, or either of them, did personally make the absolute etatement of fact alleged in the Statement of Claim —that is, that the estate included in the contract no more than 1200 acres of tussock land. It is not disputed that- all the parties did, when the-contract was entired into, honestly believe that the tussock land did not- exceed 1200 acres, or that this belief on the purchasers' part war> the result of statements made to them by the vendors. The question is, what were the statements so made? The case for the purchasers is that the vendors gave an absolute representation equivalent to a warranty that the tussock area did not exceed 1200 acres, that of the vendors that, while tht-y did state their belief that such was th., area of the paddock, they informed the purchasers that this belief was founded on the statements of the EI worthy's to that effect. All parties knew that the property was. and had b:en bought as, un.surveycd land from the trustees of the Elworthy estate. Thomas Belcher, one of the purchasers, says in hl-i evidence-in-chief that vlun he. Chapman. Mackenzie and Cmshie first inspected the land in October, in I going over the tussock block. Mackenzie :-:i':-l there wcie 1200 acres in it. that I it " was c-arrvinsr 16 to 17 hundred I sh.ep. He said 1200 acres. He seemed to ki:o«- the area. We uc-c-.-pted the 1220 acres and acted upon it.'' He then Triers to Corsbie's statement with which I have already dealt. On cross-examination ax to this occasion he says that Mackenzie then mentioned Elworthy's name in connection with the block—that he said :"Th.it is .what Klwoithv assured liini was in th?

block" ; that when lie wont home lie told his father and bnitlKr (two of the purchasers) what Mackenzie told him—that there were 1200 acres- of tussock land: that ho would not. sav that ho told him that Mackenzie told him that the Klworthy's had assured him (Mackenzie) that there was i-.m----...0re than 12C0 tu-ivs in it. Speakm- as to the same occasion. Chapman, »*<>"<■" " l the purchases, says simply: "re (.Mackenzie) told me the area of the b.ock wa.> 1200 acres/' Coisbje. who n< one "I the oariv on this inspection , says: I did not. .aid at tho inspecu<m^o the area of the tussock land. l\? -dso .avs that Macken/.i,', in answer to a question in** hha a* l» L» e and sock land, said that it was 1200 ace.-, and that he could guaranty it at IZoJ ae . We have already dealt with that mattei. He added: -Either of them said anythin- that would lead me to suppose tliey [had anv doubt as to the area _ lhey said th'-v'-lmd it from the Elworthy s that lot wa.; 1200 acres." Mackenzie, as to the same occasion, says that as- far as he remembers he was riot asked a* to -the. tussock area. It would, we think, 1)3 difficult, if the matter had stood at this, to say that, the purchasers had satisfactorily discharged the onus, undoubtedly on them, of proving clearly and satisfactorily that there was a positive replantation, on which tho defendants could justifiably have acted that the tussock acreage did not exceed acres. But the matter does not stand here. On 23th October Crosbie wrote a letter to Mackenzie in these words: "Confidential.

"Geraldine, 28th October, 1905. "S. Mackenzie, Esq.., "Dear Sir, —Herewith please find parti culars of a few questions which Mevsri •Chapman and 'Belcher' have requested ms to obtain from you. Kindly give me -thfisa at your earlkst convenience, and address your letter to 67, Derby street, St, Albans. These gentlemen say there is a great quantity of gorce on the property, the clearing of which will run into hundreds of pounds. Otherwise they are well pleated with the estate. They" think it a bit far from Timaru. The distance of fencing required you can get from the tracing, as you will, no doubt, know the point from which it starts. As soon as they get the. particulars asked for they will be prepared to go to business. Chapman has a boy growing up and Belcher has either three or four, and they are both anxious to place them on the land. Write me confidentially, which I will not show to 'Chapman and 'Belcher'; then give me particulars required on another sheet, which I can hand to them. Meanwhile, acting on your'behalf, I have given them 10 days, but shall bring things to a point before then. Is £7 '3s your bedrock price? You can trust to my doing all in my power to bring the thing off.—Yours faithfully, Lewis E. Cor Ms." "Particulars asked for by Messrs Chapman and Belcher: "1. Wanted tracing of property at I'areora, promised by Mr A. Scott, giving numbers of section, etc. "2. Give as far as you can tin area of tussock land. "3. Give as far as you can the area of land on blocks which are ploughed, which it was found impossible v to plough. , . '-'4. Give the unmbsr of miles of fencing which is required to complete the line of fencing up to Rattray's boundary. . • "5. Give as fieav as you can the number of ewes on the property and their ages, number of horses, draught and hack. "6. Give number of cattle'and : their respective ages as near as you can. "7. Give particulars pi the land under .crop and that which is let, and area now /ploughed." ' It is unfortunate that Corsbis has lost or destroyed the letter in which Chapman and Belcher had requested the information a.vk : ed fo rin this letter. "The letter of Cors-bi-i'd—almost the only piece-of .documentary evidence on the point of representation—is of the greatest importance. It was at the trial the case of the purchasers that they, before the date of the letter, had received from Coi-sbje, as coming from the vendors, an actual guarantee, and, on the inspection of the property, a positive representation that the area of the trcsock block was 1200 acres. Yet they request C'orsbie to ask the vendors, amongst other questions: : "Give us as far as you can the area of tussock block" —a question immediately followed by : 'Give as far as you can the area of land on blocks which are ploughed, which it was found impossible to plough." The, vendors replied on 2nd November:

"L. K. Co-rsbie, Esq., Chr.'stclrurch. "Dear Sir, —I would have replied to yours of 28th ulto. cooner but have bc-cn from home. I understand you got a•; racing of the property from llx A. Scott with particulars of areas in the different paddocks, j.howing acreage in each not ploughed. These are the best particulars I can give you now as we have not had the place surveyed yet. The Elworthy's assured us that the tussock block does not exceed 1200' acres, and of thi< 1 am quite sure 78C0 acres could easily be ploughed, in fact I think I am within the mark when I say that there are not 1000 acres on the whole property not fit to plough. . . —Yours faithfully, S. Mackenzie." It was argued for the purchasers that the statement as to the area of the tussock land supported their contention. With' this proposition we are entirely unable to agree. In our opinion the answer, read with the requisition to which it- is a reply, distinctly negatives tha suggestion of either a guarantee or a warranty of the area. The writer has beea asked as to Ills knowledge of the area; he replies by stating the extent of his knowledge and its source. He says, in effect : "All I know about it is that the Elworthy's, from whom we bought it unsurveyed, assured us it does not exceed 1200 acres." This statement is literally true and exact; it is also consistent with, and therefore corroborative of, the evidence given by the vendors at the trial. They do not even pretend that the Elworthy's ever gave them, or knew, the actual area. It seems to me difficult to imagine a more guarded and limited representation. It is immediately followed by words which show tha writer quite capable of using apt terms when he wishes to make a definite and positive statement: "And of this lam quite sure 7800 acres could easily be. ploughed." In the immediately prece'ding words he had written of the areas in the different paddocks : "These are the best particulars I can give you now as we have not had the place surveyed yet." The vendors' feitrr was intended for the information of the ; purchasers and.was at once communicated to them. Had they immediately on its reccipE written tha offer which, with the vendors' acceptance, constitutes the contract here, could they have-'been heard to say that the vendors had «rua ran teed or warranted that thi block did n::t exceed 1200 acr.-s? This is clearly th.' vkw taken by the learned Judge hi the Court b>low. /

If that be :-<i, -'Ai.-j w r.ir.".; h'uk for ovidriico- of iiny guiiKiiii ".' or \\-.r. :i:ity to th? sul)V''|' ; ii; conversation i and i :a:s:e(ions Yr'.w -n !'ie parties. ('n 7 !i \V.v mber--tin: i..-. almost imriudiaU-'y i.!':■:!• the iv-ci-ij.- of tlio ktU-r--.hi' ihive iiiicher's made a second inspection acconi-":'ded l.v Scott. T. W. Belcher says: " We yrc-ul through the tussock land as w-11 as the rem of the <.<-tate. Mr Scott slid repeated it- the tussock block-was 1200 acres, and gave th« same sheep-carrying capacity as Mr Mackenzie He did not say about. 1200 acres-, but 12C0 acres. H<» did not say anything that would lead pie to suppose

he had "anv unccrtuintY as to the area, of the tussock laud." .1. R. Belcher says that on mis occasion : "Scott assured me that the tussock block was 1200 acres. He did not. express anv doubt, in liiij mind as to the area. He "said nothing to put Mc on mv (anv ) «-nquirv as to the. e,''e.a.' James Scott ways, as to this, that on the night, b-i'ore the inspection, while, going over the 1,„n, 3 paddock, Tom Belcher asked him, it ]i-. could tell him as near as possible the ;lL .,va<r." of the. wheat, and that he gave them" as near as lie could, but adrled : '•Mark von, I am not giving them as.' :tlu correct acreage." Next day, going over the land, he savs : " Turn Belcher asked me what would" bo the probable area of the, tussock Muck. 1 said that we believed that it contained 1200 acres. This was all thai, was said as to the area of the laud.' On cross-examination he says : "I understood | that the block contained 1200 acres. } ■rot it from Mr Shrimpton (Klworthy s manager). Before I entered into, the negotiatirms I had no reason to doubt that the area was anything but 1200 acres. Mr Shrimptontold me that the block was always known as 'the 12C0 acre block. He had previously said that- " Corsbie asked us cnriirrallv as regards the fences, tlie amount of " tussock. We told him there was a fair amount of tussock land, going through the ploughed area, and we also told him that there was a separate block or tussock. We told him. we believed it to be. about 1200 acres."

After the .second inspection there were three interviews, all in the same week, between the parties at the office used by them in Clmstchurch. The four veruiois were present at either two or three of these interviews:. Mackenzie and Scott were present at the first two, Mackenzie alone at the third. As to what took place at these, interviews as to the area of tussock land there is, except on one point, no very great variance. The purchasers say that the question of the extent of the area wis very much discussed. Why this whould be if the vendors had always represented aJid guaranteed the area is not very obvious. There would naturally be discussion as to the value of the block, and it may well be that, when spoken of, it was, as the purchasers allege, called indifferently the "tussock block" or the "twelve hundred acre block." It is common ground that both parties at that time believed it to contain what the Klworthy's said it contained—not more than 1200 acres—and any discussion would naturally proceed on that basis. What is mainly in dispute is, did Mackenzie, at one of the interviews, in reply to a question from Chapman asking if the vendors would guarantee it as 1200 .acres, reply : "No, I will not guarantee, that block or any other .block?" Mackenzie swears hj«. did so. Scott aives a slightly different

account. He says :: : "Chapman remarked that it appeared poor grazing country. Mackenzie said that Elworthy told him that during his father's lifetime and his they had always had 1700 merino ewes on it all the year "round. Chapman seemed to rather doubt the acreage, and asked Mackenzie if he would guarantee it, Mackenzie said, 'No, but Elworthy said so; but clearly understand that we will not guarantee the acreage on this or any other block on the property.' " The purchasers deny that anything of this was said, and say that the word "guarantee" was not mentioned at ar.v of the interviews. On 7th December Corsbie and Tom Belcher came to Timaru, where they met the vendors in their Solicitors' office. There was a discussion as to the terms of the proposed sale. The parties discussed the terms for aboul*-an hour, and the vendors made an offer. It is not denied that nothing was then said about the area, and nothing as to it appears in the offer or in any of the subsequent negotiations which culminated at another meeting in Timaru in the proposal and acceptance of 22nd DeeemhiT. This agreement was arrived at only after five hours' disciT.-.sion, during which admittedly' nothing was said about the area of tli3. tussock block. Under that agreement the p'urch'aser-s entered upon»'the land. They engaged a surveyor to survey it. They entered into negotiations for the sale of part of the tussock block Early in, March they learned from their surveyor that the iussoek block was some BCO acres in excess of the 1200. On 9th March Chapman wrote to Mackenzie this letter: ' '-161 ■ Hereford street, Christchurch. ..- "9th March, 19C6.

"S. Mackenzie, Esq., "Dear Sir, —Referring to my •conversation with you a few days ago relative to the area of the tussock land being much more than you stated to ua it was, I have just received a telegram from Mr Hunt, the surveyor, saying there was 2040 acres of tussock instead of 1200 as represented by you. I remember you telling us that Mr Elwcrthy had offered to guarantee-you the tunsoek land did not exceed 1200 acres, you accepted their statement, and this ia most likely how you have fallen Mnto the error. We don't want to be unreasonable, but, under the circumstances, think you uhould not allow us to suffer a loss through a representation of yours which turns out to be so very inaccurate. We shall, therefore, be glad to hear from you what you are ready to do to meet us in the matter. — Yours'truly, R. W. Chapman." Mackenzie did not answer this"letter but on 27th March, he and his solicitor, Mr Tripp, met Chapman in the street in Timaru. Chapman raised the question of the tussock land; Tripp said they could not consider any such question. Tripp then said : "Mackenzie and Scott will take the place back again and cut it up themselves." Chapman said that could not be. On 26th March the three Belchers Chapman, with Mr Meares, their solicitor, met at Mr Tripp's office. Mr Tripp's account of _ the interview is that Meares said to him: "What about this tvssock land?" and that he replied : "Well, what about it?" A letter was then produced written by Corsbie to Messrs Belcher and Chapman, dated that day, in which he stated that both the vendors more than once told him he could guarantee the tussock block as being 1267 acres only. This statement was instantly and vigorously repudiated by both tha venders. Mackenzie added: "Hon- could we guarantee it when the Elworthy's themselves were not certain. The Elworthy's could as well guarantee it, but would not do go." I have before referred to the subsequent action of the parties resulting in this suit. In considering this evidence we mustbear in mind that the onus of establishing the existence of a guarantee or warranty is always on the party setting it up. This is specially to b» insisted upon when what is set up is a part of, or at least collateral to, a transaction which has reunited in an agreement the terms of which have been reduced io writing and signed by the parties. It is always unsatisfactory to have to construct a contract out of conflicting verbal statement*. Courts of Justice have always hiQU reluctant to allow t|v? introduction of such evidence to vary or to add I firms or incidents to a written contract. The present case is a strong illustration of the inconvenience of so doing. This Court in asked to decide a. question of fact depending upon the- exact terms of conversation'! made long before and which have to h.> ascertained from the conflicting evidence of persons strongly intereste.l in the mult, and with every temptation to twist an.it colour llir-ir evidence, H wrrs very strongly urged for the pro 1 - cimsers that even if tile- rtiiteuieiUs of the vendors did not amount to a guarantee or a warranty in law. yet it would be.inequitable for the vendors to compel the purchasers to carry out the agreement without

giving them compensation for the admitted defect in the quality of the land. But. the view we have taken of the evidence equal !y excludc-.s this position. The etateniems of the vendors Were as to a fact which the purchaseis knew must necessarily be a mallei- of estimation. They were not made as a positive statement of fact, but as a. mar.,!- of belief; and the vendor* in making litem informed the pureh;.-.:.rs of the. ;:ource of thejr belief. It was open to the purchasers to investigate the point further, or to make the contract subject to stipulations for compensation in Hie event r.t the statements turning out to be. inaccurate. That being so. the position of the purchasers woukfbe at best that they had out awl into the contract under a mutual error as to the quality of its subject matter. That the error was a material one may be admitted. But the most that this would entitle the purchaser to claim was what the vendors offered—a recision of the contract, they taking over any cub-contracts made by 'the purchasers (all of which were made sn'tbsequent to the knowledge of the purchasers of the over area) a proposal which, if accepted, would of course have included compensation to the purcharers for any actual expenditure by them on the property. This the purchasers naturally declined, they having ascertained that they had made, -with the fullesjt allowance for the larger extent of inferior land, a very profitable "bargain. But thay cannot, elect to. treat the contract kg.in force and at the

same time claim compensation for the result of the honest misunderstanding between the parties. The form of the action is immaterial. It is really an by the vendors for the purchase money UK which the. purchasers are suiting up an equitable plea which they have to establish. In the view wo take of the evidence thav have failed to establish the allegation which is the basis of both their defence and counterclaim. It is therefore unnecessary for us to discuss or to determine the interesting and important, questions of law dealt with in the judgment in the Court below. The appeal will be dismissed with costs on the highest scale as from a distance.