claim abatement I have very little doubt, although there are several cases in the No. 168. books in which a tenant has been held not entitled to abatement of rent until

Davie v.

he had liquidated his damages. These cases are not very easy to reconcile with July 18, 1876. others in which abatement has been allowed. Perhaps they might be reconciled Stark. by a consideration of the nature and amount of the claim of damages in the different cases. I may, however, advert to the case of Campbell v. Watt, June 18, 1795, Hume, p. 788, as closely analogous to the present, in which an abatement from the rent of an inn was allowed in defence to the landlord's claim of rent, because the landlord had erected another inn at a short distance, contrary to what was held to be the implied condition of the tenant's lease. That case is very much in point as a precedent for the present. Indeed the present case is a fortiori of that of Campbell v. Watt, because here there was an express condition that the landlord should not set up another shop of the same kind in the adjoining premises, whereas in Campbell v. Watt such a condition was only implied. Therefore, what I desire to rest my judgment upon is this, that the tenant here is entitled to say that the rent sued for is extinguished by his counter claim of damages. It would be very unfortunate if, after a long proof on the extent of damages, the tenant were obliged to bring a new action to liquidate the amount. This was not held necessary in the case of Campbell v. Watt, and I do not think it is necessary here.

Neither do I think it necessary to determine whether the tenant had a right to rescind the lease. I should have had great hesitation in coming to the conclusion that it was competent for a tenant under a seven years' lease, with four more years to run, to throw it up in the circumstances which have here occurred. I think the argument for the pursuer against his right to do so has not been answered, especially as no instance has been adduced in which a tenant, who had the remedy of interdict open to him and did not use it, was found entitled to rescind. In Guthrie v. Shearer (Nov. 13, 1873, ante, vol. i. p. 181) it was held that the tenant of a quarry was entitled to rescind the lease because he did not get possession of a road stipulated for in the lease and indispensable to the working of the quarry. But in that case the remedy of interdict was not available. The tenant could not by way of interdict obtain the road to which he was entitled. I do not therefore think that case in point.

Without saying that under no circumstances would a tenant be entitled to rescind his lease, I am not satisfied that he was entitled to resort to that extreme measure of redress in the present case. Nor is it necessary so to determine, for it is enough to entitle the defender to absolvitor that the damages due to him by the landlord for breach of the contract of lease are at least equal to the rent sued for.

LORD GIFFORD.-Although the amount of the pecuniary or patrimonial interest involved in this case is comparatively small, the case itself raises questions of some delicacy, and of great importance in the law of mutual

contract.

The appellant, Mr Stark, was lessee of a shop No. 92 High Street, Edinburgh, under missives dated in February 1872, and that for the term of seven years from and after Whitsunday 1872, at the yearly rent of £100. The missives were entered into between the appellant as tenant, and M'Kellar and Swan, who were then proprietors, and the missives were followed by possession. Accordingly it is not now matter of dispute that a valid and effectual contract of

July 18, 1876.
Davie v.

Stark.

No. 168. lease was entered into for seven years, and although the present respondent, Mr Davie, is a singular successor of the original lessors, it is not now contested, and indeed could not well be, that he is bound by the missives of lease granted by his authors, and clothed with possession. It is true that in the correspondence both parties-first Mr Davie, and then Mr Stark-took an opposite view, that the lease was only valid from year to year; but this is now given up, and rightly given up, by both parties, and the validity of the seven years' lease is no longer disputed. But, whether disputed or not, I think there is no doubt whatever that a lease for seven years was validly constituted and subsisting, at least until the dispute arose which led to the present proceedings.

It was a condition of the lease, and in my view a very material and important condition, that the shop let to the appellant should have secured to it what has been called a locally limited monopoly, to this extent, that the adjoining shop, which belonged to the same proprietors, should not be occupied for the purposes of the same trade as that carried on by the appellant. The words of this condition in the missives are peculiar. They are as follows:-"On condition that the two shops above" (afterwards restricted to the shop immediately above) are not let during the term of my lease to any person or persons in the drapery, clothing, or ready-made outfitting trade."

66

I am of opinion that this condition and stipulation was one which might legally and competently be made-that it was binding upon the contracting parties and on the singular successors of the lessors as an integral part of the appellant's lease; and the first question which arises is, has this condition and stipulation of the lease been observed by the respondent, who is proprietor of both shops-that is, both of the shop let to the appellant and of the shop inmediately above it; and upon this point a long and somewhat elaborate proof has been led under a previous order of Court.

I am of opinion that it has been sufficiently proved that the respondent, from the commencement of the lease down to and subsequent to Whitsunday 1875, has violated and contravened this stipulation in the lease, inasmuch as the respondent during that period has used and occupied the shop immediately above the appellant's shop for the sale of articles in "the drapery, clothing, or readymade outfitting trade." It was originally contended that as the stipulation o was that the shop adjoining the appellant's should not be "let" for such a trade, this would not prevent the respondent from so occupying the shop himself. This view, however, which was obviously against the good faith of the contract, was at once disclaimed and abandoned at the bar. It is perfectly obvious that the meaning of the agreement was to prohibit a particular trade in the adjoining shop, whether that trade should be carried on by a tenant or by the landlord himself.

As to the extent of the violation or contravention of the condition, it is true upon the proof that the contravention only went to a certain extent. The respondent did not carry on in the shop adjoining that of the appellant exactly the same trade as that carried on by the appellant. The appellant was a draper, clothier, and outfitter; the respondent was a hatter and bootmaker. But then it is abundantly proved that a great many articles which form a part of the appellant's trade as clothier and outfitter were also sold by the respondent, although he was nominally a hatter. For example, although there was not much objection to the hats, cloth caps were sold by the respondent to a very large extent-ties, mufflers, scarfs, braces, woollen shirts, collars, socks, stockings, and other such

July 18, 1876.

articles, were all found in the respondent's shop, although many of these formed No. 168. staple articles in the appellant's trade. I cannot doubt that all this was a contravention of the condition, and in my view it is a most important point. It Davie v. was a contravention deliberately and resolutely insisted in by the respondent. Stark. He absolutely refused to modify his trade in any way. It may also be conceded that the amount of sales effected by the respondent in what I may call contraband articles is not very great, looking to the considerable period of time which elapsed. Still I think the sales were material, and the contravention was not a trifle which it can possibly be said the law will not consider. The extent of goods sold or turned over by the respondent is not the measure of the appellant's loss or prejudice. He had a competitor next door, when his landlord had expressly guaranteed him against such competition. He may have had, as suggested in the proof, to lower prices, to press sales, and to submit to the annoyance of seeing possible customers seduced by his neighbour's window and his neighbour's display. And then the appellant could never tell to what extent the rivalry and competition might go-what sacrifices it might involve, and what classes or consignments of goods it might make useless. And so, upon the proof, and without going into details, which are minute and varied, I am prepared to hold that the respondent is chargeable with a gross and persistent violation of the stipulation in the lease, and that to a material and unjustifiable extent persisted in for three years, and this persistence is an all-important attribute of the contravention.

At last Stark puts himself in a very good position. On 23d April 1875 his agents inform Mr Davie that unless he discontinues on or before 1st May infringing the terms of the lease Mr Stark would hold himself entitled to renounce the lease and vacate the premises at Whitsunday. Now, this was perhaps a little late. Still it was the right ground to take. If the answer had been that Mr Davie regretted that there had been a breach of the lease on his part, and that the objectionable articles would be at once removed from his shop, Stark would have been obliged to continue the lease. But what is the answer of the pursuer's agent?" As my client is not aware that he is infringing the terms of the lease he declines to alter the conduct of his business." Defiance is thus thrown down. I cannot doubt the defender's right to renounce the lease after he got this answer. I do not think he was bound to resort to interdict-a possible but a troublesome remedy. The remedy of rescission of the contract was fairly open to him. It would be impossible to hold, for instance, that where a proprietor had let a hotel, guaranteeing that there should be no other hotel within a certain distance, if he were to proceed to build another within the distance stipulated, he could oblige the tenant to continue in possession, leaving the tenant to claim damages. The general rule of law is that if one party to a mutual contract will not fulfil a material condition of the contract, the other party is entitled to rescind the contract. Although, as has been observed, there are very few cases in the books in which this doctrine has been applied to the contract of lease, the reason is that a material condition of the lease is seldom violated by the landlord except where he does not give possession of the subjects let, and there are cases falling under this head. Suppose that a right of access to the subjects let were guaranteed by the landlord, could it be doubted that if this access were shut up, especially if it were shut up by the landlord himself, the tenant would be entitled to rescind?

I am therefore of opinion that the tenant was entitled to rescind the lease. I

No. 168.

July 18, 1876.

Davie v.

Stark.

am also of opinion, with your Lordship, that in any view the damages due by the landlord are sufficient to extinguish the sum claimed.

Otherwise

LORD JUSTICE-CLERK.-My opinion goes mainly, if not entirely, upon the intimation by the landlord of his intention to violate the contract. there would have been great force in what Lord Ormidale says.

THIS interlocutor was pronounced:-" Having resumed consideration of the appeal, with the record as amended, and the proof, find that the missives by which the lease libelled was constituted contained a valid and mutual obligation on the part of the landlord not to let the adjoining premises to any one in the ready-made men's clothing trade, and that the obligation was enforceable against the respondent (pursuer) as a singular successor: Find that the respondent systematically violated this condition, and that to an appreciable extent, during two and one half years, and that he maintained his right to continue his trade as formerly, and intimated his intention of doing so, notwithstanding remonstrances from the appellant: Find that the appellant has suffered damage in consequence of the respondent's violation of this obligation to a greater extent than the sum sued for: Therefore sustain the appeal, recall the judgment appealed against, and assoilzie the appellant (defender) from the conclusions of the summons, and decern Find the appellant entitled to expenses in both Courts," &c.

G. M. WOOD, S.L.-WM. DONALDSON, Solicitor-Agents.

No. 169.

July 19, 1876.
M'Lay v.
Borland.

1ST DIVISION.

B.

JANET HALLEY OR M'LAY AND OTHERS, Pursuers.-Jameson. JANET RALSTON OR BORLAND AND OTHERS, Defenders.-Scott. Destination-Succession-Contingent Vesting-Defeasible Fee.-In 1816 a testator disponed heritage to his son, if in life, and the heirs of his body, whom failing, to the testator's daughters in liferent, and after the decease of the survivor of them, to his grandson (a bastard) and the heirs of his body, whom failing by predecease without issue, to the testator's nephew and his heirs in fee. It appeared from a proof that in 1802 the testator received information that his son, a sailor, then fourteen years of age, had been drowned abroad, and that nothing had occurred to throw doubt on the correctness of this information. The testator was survived by his daughters, his grandson, and his nephew.

The grandson executed a conveyance of the heritage, but predeceased the liferenters without leaving issue.

In an action of declarator brought by the representatives of his disponee, held (1) that the son (who would have been ninety years old if alive) was dead without issue; (2) that on the testator's death the fee vested in his nephew, subject to defeasance in the event of its appearing that the son survived the testator or left issue, and also in the event of the grandson surviving all the liferenters; and (3) that as the grandson predeceased the last survivor of the liferenters the fee never vested in him, and he had no power to convey (Lord Deas dissented from (2) and (3), holding that the fee vested in the grandson.)

ALEXANDER DRUMMOND, cowfeeder, died in 1823, possessed of certain Lord Young. subjects in Lauriston Street, Edinburgh. He left a disposition and settlement executed in 1816, by which he conveyed all his property "to and in favour of my son, Gordon Drummond, presently abroad, if in life, and the lawful heirs of his body, heritably and irredeemably, whom failing, to Margaret Drummond, Janet Drummond, and Agnes Drummond, my

daughters, in liferent, for their joint and pro indiviso liferent right and No. 169. use, and to the survivor of them, in liferent, and after the decease of the survivor of them, to John Drummond, my grandson, son of my daughter, M'Lay v. Margaret Drummond, and the heirs of his body, whom failing, by prede- Borland. cease without lawful issue, to Alexander Drummond, my nephew, son of my brother, Robert Drummond, and his heirs in fee."

Gordon Drummond had run away to sea in 1799 when thirteen years of age. He wrote two letters to his father during the next twelve months. About two years afterwards information was received by his father that he had been drowned, and he was never heard of again.

The testator was survived by his three daughters, of whom Margaret (Mrs Halley) died in 1858 leaving issue, Janet in 1867 without issue, and Agnes (Mrs Ralston) in 1872 leaving issue, and by John Drummond abovementioned, who was an illegitimate son of Margaret. The daughters entered into possession of his heritage, and their possession continued till the death of the last survivor, Mrs Ralston.

In 1833 John Drummond executed an onerous disposition of the subjects in Lauriston Street in favour of his mother, Mrs Halley, and her heirs. He died without issue in 1858.

After Mrs Ralston's death in 1872 her children took possession. But Mrs M'Lay and others, Mrs Halley's children, raised this action against them, concluding for declarator that the pursuers were proprietors.

They pleaded;-(1) The now deceased John Drummond, in terms of the disposition and settlement of Alexander Drummond, dated 9th September 1816, succeeded to the fee of the subjects mentioned in the conclusions of the summons upon the death of the disponer, and in consequence of the failure of the institute first called, and the heirs of his body, who had predeceased. (2) The right to the fee of the said subjects was effectually conveyed to Mrs Margaret Drummond or Halley by disposition by the said John Drummond in her favour, dated 5th April 1833.

The defenders pleaded;—(3) There being no proof or presumption that Gordon Drummond predeceased his father, John Drummond had never any right in the subjects, and could not convey any to his mother. (4) Farther, and separatim, John Drummond having predeceased the daughters of Alexander Drummond, no right ever vested in him, even assuming the existence of the alleged disposition and settlement and the predecease of Gordon Drummond without lawful issue. (5) The presumption being that Gordon Drummond is now dead, the defenders and pursuers are entitled to succeed to said subjects, partly in their own right and partly in that of their deceased aunt, as heirs of the said Alexander Drummond or as heirs of the said Gordon Drummond.

A proof was led. Neither the record nor the proof contained any information about Alexander Drummond, nephew of the testator, and neither party founded upon the conveyance to him.

The Lord Ordinary, after ordering intimation to the Queen's Remembrancer, who lodged a minute declining to appear, pronounced this interlocutor:-"Finds-1st, That the testator's son, Gordon Drummond, predeceased his father, the testator, without issue, and that on this footing the property in the record referred to was possessed under the liferent destination of the testator's settlement from the testator's death in 1823 till the death of Mrs Ralston, the last survivor of the liferentrices, in 1872; 2d, That John Drummond, the testator's grandson, being an illegitimate son of the testator's daughter, Mrs Margaret Drummond or Halley, died in January 1858, without lawful issue, and that having thus predeceased without lawful issue the last survivor of the liferentrices the