1ST DIV. personal obligation and secured over his heritable The Lord property. Accordingly it seems to me that V. Lord 1917. HOUSE OF LORDS. Dunedin, Lord Atkinson, Lord Shaw of 14th December 1917. 3. Glasgow and South-Western Railway Company . Boyd & Forrest. Res judicata-Medium concludendi-Effect of decree of for payment of sum in excess of contract price as quantum absolvitor from petitory conclusion-Contract for construction of railway-Contractors suing railway company meruit, and maintaining that contract was induced by fraud and misrepresentation and was inapplicable as basis of charge - Railway company assoilzied under under the contract in respect of two specified items of claim-Contractors going to arbitration and lodging a claim under the contract comprising the whole items of decree of absolvitor was res judicata and barred the conclaim put forward in the previous action-Held that the tractors' claim in the arbitration except in respect of the items specially reserved in the decree. reservation of contractors' right to go to arbitration Advocate there were here two annuities and not one (The Lord Chancellor (Lord Finlay), Lord Lyell. annuity. Further, the consideration for the December 12, granting of the new annuity was full and complete, being the discharge of an annuity of the same amount and equally well secured. I do not understand on what view it was argued that there was not here full consideration. That, however, is not enough. In order to avoid liability for estate-duty there must be "full consideration in money or money's worth paid to the vendor or grantor for his own use or benefit." If the original annuity had been granted for a full money consideration, I should have thought that its discharge constituted "full consideration in money or money's worth." The original annuity, however, was not granted in return for any consideration of a pecuniary nature. Accordingly I do not think that its discharge constituted a consideration in money or money's worth for the granting of the new annuity. That seems to me the true ground upon which the defender's case under section 3 (1) of the Act of 1894 fails. The expression "full consideration in money or money's worth" is familiar in earlier legislation, and constantly recurs in the Finance Act of 1894. Thus by section 7 (1) (a) no allowance is made for debts incurred by the deceased, however onerous, unless he received "full consideration in money or money's worth." If the argument of the reclaimer were well founded, a person might in his lifetime convert, by a mere process of conveyancing, an obligation incurred in consideration of marriage, and prestable at his death, into an obligation incurred for money or money's worth. The reclaimer founded also upon section 15 (1) of the Finance Act of 1896. My reading of that exemption clause is that it applies only where the creator of the annuity reserves or creates no benefit for himself from the transaction. I have already expressed the opinion that the defender obtained full consideration for the new annuity which he granted. It follows that this clause of exemption does not help him. The result is that estate-duty must be paid Counsel for Pursuer, The Lord Advocate (Clyde, W. S. D., for M. D. Appeal from an Interlocutor of the Second Division (The Lord Justice - Clerk, Lords Dundas, Salvesen, and Guthrie) reversing an Interlocutor of Lord Dewar. The following narrative is taken from the judgment of the Lord Justice-Clerk: In 1907 Messrs Boyd & Forrest, the present defenWestern Railway Co., the present pursuers. ders, raised an action against the Glasgow and SouthThe summons in that action, for some inscrutable reason, was in the form of an ordinary petitory action, asking decree for a sum of money, while all that the condescendence averred was that Messrs Boyd & Forrest, as contractors, had been employed by the railway company to do certain work for them which they had done -that they had been paid so much to account of the amount due in respect of the said work having been done, and that there was still a balance due, being the amount sued for the pursuers' only plea being "The defenders being justly due and resting-owing to the pursuers in the sum sued for, the pursuers are entitled to decree as concluded for." In their defence to said action the railway company explained that Messrs Boyd & Forrest had, by a formal and detailed contract, specification, and plans, agreed to construct a railway for the company for a slump sum; that the railway had been constructed, and that the contractors had been paid all that they were entitled to under the contract, and more. Forrest substituted for the original condescendence In consequence of this defence, Messrs Boyd & and plea a long and detailed condescendence, the main feature of which was that the original contract was no longer binding on Messrs Boyd & Forrest, that it had been departed from and entirely superseded, and that they were entitled to be paid fair and reasonable prices for the work which they had done. In other words, they now disclosed that their claim was for a quantum meruit. The new condescendence was focussed in two new pleas, being pleas 2 and 3 of the closed record: "2. The pursuers having, on the defenders' employment, executed the work contained in the account su for, and the prices charged therefor being fair and reasonable, the pursuers are entitled to decree as concluded for. "3. The contract founded upon by the defenders is inapplicable as the basis of charge for the work executed by the pursuers, and is no longer binding upon the pursuers, in respect (a) that said contract was induced by the fraud of the defenders; (b) that said contract was entered into by the pursuers under essential error induced by the misrepresentations of the defenders; (c) that the work as executed by the pursuers proved to be entirely different from that contemplated by the contract; (d) that said contract was by agreement of parties departed from as a basis of charge; and (e) that the defenders are by their actings barred from founding on said contract as the basis of charge." Incidentally, and as alternative to their quantum meruit case, Messrs Boyd & Forrest averred "alternatively, in the event of the contract hereinafter mentioned being held to be binding in whole or in part on the pursuers in respect of the work executed, the pursuers have suffered loss and damage to the extent of the sum sued in respect of the fraud, the negligence, and breach of contract of the defenders, all as aftermentioned." Nothing more was averred or "aftermentioned" by the pursuers as to damages, but they added a further new plea, viz. : "4. Alternatively, the pursuers having suffered loss and damage to the extent of the sum sued for, owing to the fraud, negligence, or breach of contract of the defenders as condescended on, the pursuers are entitled to decree as concluded for." After hearing parties in the Procedure Roll, the Lord Ordinary (Salvesen) pronounced the following interlocutor on 14th July 1908: 1917. them on a basis of quantum meruit. On 1st March 1915 HOUSE Thereafter the arbiter under the contract (Mr John "The Lord Ordinary, having considered the cause, before answer allows to the pursuers a proof of their averments so far as bearing on their third plea in law, and to the defenders a conjunct probation, to proceed on a day to be afterwards fixed, and reserves all questions of expenses," and on 13th November 1908 the Second Division adhered to said interlocutor. The proof so allowed was taken by Lord Johnston, who, on 20th January 1910, sustained branches (a), (b), and (e) of said third plea, and found that the pursuers (Messrs Boyd & Forrest) were "entitled to reasonable recompense" for the work they had done, "allowing for payments to account either in name of quantum meruit or, which in the present case is substantially the same thing, of damages as may be ascertained." On 10th November 1910 the Second Division sustained branches (a) and (), omitting branch (b) of said third plea. After sundry further procedure, the railway company obtained leave to appeal to the House of Lords, and that House, on 3rd April 1913, reversed, inter alia, the said interlocutors of 20th January 1910 and 10th November 1910, found that Messrs Boyd & Forrest The arbiter, having heard parties on the said claim had failed to prove that they had been induced to and answers, on 24th July 1916 issued an order in eater into the said contract by fraud, and remitted the which he found that the entire claim was within his canse to the Court of Session, "with directions (1) to jurisdiction, and that he proposed to proceed accordrepel branch (a)" of said third plea; (2) to repel ingly, reserving in hoc statu all questions of relevancy, branches (b) and (e) of the said plea, in so far as and in order to enable this order to be brought under founded on allegations of fraud, and to hear and dis-review of a Court of Law, he sisted further procedure pose of the whole pleas and contentions, except in so far as repelled, in terms of the said directions. This order of the House of Lords was duly applied by the Court of Session on 5th June 1913. After further procedure the Second Division, on 7th February 1914, sustained branches (b) and (e) of said third plea, and repelled branches (c) and (d), and found that the contractors vere entitled to be paid for the work done by in the arbitration. The railway company thereupon, on 21st August 1916, raised the action in which the present reclaiming note has been taken. In that action the railway company sought declarator to the effect that the arbiter had no jurisdiction to entertain or determine the said claim for £88,830, 13s. 11d., and that the claimants should be interdicted from proceeding with The Lord Justice-Clerk [after the narrative above quoted]. In my opinion the plea of res judicata does not apply in the circumstances of this case. I agree that, if not altogether, at least to a large extent, the work claimed for by Messrs Boyd & Forrest in the arbitration and referred to in this action is the same as was claimed for in the action finally disposed of by the House of Lords, and that even the separate items in the accounts in the two processes were the same. But the grounds of action, the media concludendi in the two processes, except it may be as to the damages under said heads (a) and (b) in the said order of 1st March 1915, and the interlocutor of 13th May 1915, were entirely different. The medium concludendi in the first action was that the contract and relative schedule had been displaced and no longer applied, for the reasons set forth seriatim in the pursuers' (Messrs Boyd & Forrest's) third plea, and that these pursuers were entitled to be paid on the basis of quantum meruit. The only proof allowed in said action was a proof of the pursuers' averments so far as bearing on their third plea in law." On the other hand, the claim in the arbitration is founded on the contract, and the claimants' rights, it is pleaded, are to be determined according to said contract and the relative schedule where the latter is applicable, and where it is not, according to the arbitrament of the arbiter in terms of the contract, said contract being thus the medium concludendi. Not only was no such view presented in the original action, but the bases of the two proceedings (said action and the arbitration) are contradictory and mutually exclusive. The ground of claim put forward by Messrs Boyd & Forrest in the arbitration was never submitted for decision to the Court of Session or the House of Lords, and, in my opinion, could not be and was not decided or disposed of in any way in said action. It seems to me that a simple and unqualified decree of absolvitor in the action could not have affected Messrs Boyd & Forrest's right to go to arbitration, as they now seek to do. But then it was argued to us by the railway company that even if this might have been true they had been put in a better position than they would have been in had they had only such a decree, in virtue of the clause in the order as to the claim for damages under heads (a) and (b). It seems odd that a pursuer should be put in a worse position by having a qualified decree of absolvitor pronounced against him than he would have been by an unqualified decree of absolvitor. In my opinion such a contention is unsound. It is said that the action was a petitory one for a sum of money made up of certain items, and that the claim in the arbitration is to a large extent for the same sum of money, made up to a large extent of the same items. But that is not the question; the question is, Are the grounds of claim, the grounds on which the demands are made, the same in the two proceedings? In my opinion they are not the same but are radically different. The addition to the order or decree of absolvitor is introduced by the words "But it is provided that." I would not readily hold that a clause so beginning could extend the scope or effect of the order or decree of absolvitor to the prejudice of the pursuers as regards rights which they would have had under a plain order or decree of absolvitor. But the clause I am now considering only provides that the order and decree of absolvitor is to be without prejudice to a specified right which it proceeds to say the respondents are to have, viz. the right "to refer to the arbiter named in the contract all claims, whether for damages or otherwise, under the contract, or in respect of breach thereof, provided such claims" have been condescended on in the pursuers' condescendence in said action, and provided they relate to the items (a) and (b) therein set forth. This, it was argued, shews that the parties and the House of Lords had in contemplation the reference clause in the contract, and that there might still be a reference under and in virtue of that clause. In the record in the present action it occurs to me that on this point parties have confined themselves to treating the dispute on this point as one of legal construction--what is the true construction of the order of the House of Lords, or rather of the decree which followed thereon, and (it is not disputed) faithfully followed the order. There is no averment on record dehors the terms of the order and the interlocutor applying the same-neither party asked a proof, and, as at present advised, I think there is no ground for allowing proof. Each party asked at once for decree in their favour on the record. We were referred at the debate before us by both sides to notes of discussions in the House of Lords on two occasions-one at the close of the argument on the appeal and the other after the opinions of the noble Lords had been delivered and before the questions were put. But there is no averment of agreement or bargain or of any fact which could either in law or in fact affect the construction of the clause in question, or give an independent ground of judgment. The counsel who took part in said discussion differed in argument before us toto cœlo as to the import of said discussions. I confess I have felt it a question of delicacy and difficulty how far we are entitled to consider these reports or as to what is the correct import of them. The clause in its present form does not appear in either of these reports, and in the end counsel were asked to draw up the form of the order for submission to the House. Our duty, it appears to me, is to construe the decree or interlocutor of 13th May 1915, and I do not see that we in any event, and particularly having regard to the pleading and proceedings in this action, are entitled to proceed in any way on these reports. The clause was represented to us as a "concession" to Messrs Boyd & Forrest by which they would be entitled to get the arbiter to assess damages (contrary to the law of Scotland) in respect of the two items (a) and (b). But the railway company say that the decree of absolvitor in itself would have excluded any further arbitration, and that the clause in question must be read as if it had contained the words "and the pursuers shall not have the right to refer any other claims to the arbiter," or words of similar import. As to the first point, in my opinion the decree of absolvitor would not have any such effect—such a right not being in dispute in the action. As to the second point, the words are not there, and we ought not, in my opinion, to construe the decree or order as if they were. The Lord Ordinary says that the decisions in the original action proceeded on the assumption that "the schedule rates did not apply," and he goes on to say that be does not see how the arbiter can now be asked to consider the same specified charges based on the same assumption." In my opinion it is a mistake to say that the charges in the arbitration are based on the schedule rates. It was distinctly explained to us that where there are schedule rates, these rates must be applied by the arbiter, and that it is only as to items for which there are no schedule rates that the arbiter's arbitrainent can be appealed to. I do not think there was any relevant statement sufficient to support a claim of damages in the original action. There was only the sentence, to which I have already referred, in Condescendence 3 and the corresponding plea-plea 4. But in the arbitration no claims of damages have been referred except those which arise out of the two items (a) and (b) specified in the order, and I understand no objection is taken to the arbiter proceeding to deal with these. I am of opinion that we should recall the Lord Ordinary's interlocutor, repel the first plea for the defenders, sustain the second and fifth pleas in law for the defenders, and assoilzie them. On the plea of res judicata we were referred by Messrs Boyd & Forrest, inter alia, to the following authorities: 1. Stair's Institutions, IV. 40, 16: "But the exception rei judicate must not only be that the decreet had the same conclusion, but also that it proceeded upon the same media concludendi, if the decreet was an absolvitor; for though absolvitor was pronounced against a pursuer it could not hinder him to insist for the same conclusion upon a different medium in which case competent and omitted takes no place, but only in decreets condemnatory in foro contradictorio. So he who pursues a reduction of any decreet or other right may raise as many actions as there are relevant reasons." 2. Macdonald and Others v. Macdonald (1842, 1 Bell's App. 819 at p. 822), where Lord Campbell says: "With regard to pursuers, on the other hand, in proceedings of this nature there may be as many A pursuer cannot a second time set up a ground of reduction on which there has been judgment against him. But this is no bar to his bringing a fresh action on a totally different ground of reduction, although both might have been included in the first actions of reduction as there are media concludendi. action." 3. Phosphates Sewage Co. v. Molleson (1879, 6 R. (FLL) 113 at p. 121), where Lord Blackburn says: "Secondly, there is a ground where there is a fresh medium concludendi; the plaintiff in the action is not obliged to join all his media concludendi in one suit; if he has one medium concludendi, and fails in proving that, he may start another, and that whether or not he knew of it at the former time, provided it be a separate medium concludendi." 4. Edinburgh and District Water Trs. v. Clippens fl Co. Ltd. (1899, 1 F. 899 at p. 909), where Lord Kinnear states: "The validity of a plea of res judicata st necessarily depend upon the pleading and decision in the previous action, and not upon any rights or equities which may have arisen antecedent to the pleadings or from any extra-judicial communications between the parties. The question always is, what was litigated and what was decided. I think the defenders have in this case stated per fectly distinctly and quite accurately the reason why HOUSE the judgment in the previous case cannot be pleaded of Lords. as res judicata in this. For they say in their sixth Glasgowstatement of facts: The pursuers did not either aver and Southor plead in said action that they had any right of Western Railway support for either of their lines of pipes, such as is Co. v. Boyd now put forward, relative to the Crawley pipe.' That & Forrest. means that they neither averred facts nor pleaded law December 14, which would have enabled the Court to decide the question raised in this action." 5. Mackay's Manual of Practice, 312: "A decree of absolvitor is a decree by which the merits of the action are finally determined in favour of the defender. It consequently forms res judicata and excludes a new action on the same grounds. A new action on different grounds may always be raised notwithstanding decree of absolvitor. Lord Dundas, Lord Salvesen, and Lord Guthrie delivered opinions concurring in the result arrived at by the Lord Justice-Clerk. The pursuers appealed to the House of Lords. On 14th December 1917 their Lordships reversed the interlocutor appealed from with costs. The Lord Chancellor.-An action was brought on 15th November 1907 by Messrs Boyd & Forrest, contractors, against the Glasgow and South-Western Railway Co., in which they claimed payment of money alleged to be due in respect of the construction of a line of railway by the contractors. That case was, by an Order of your Lordships' House dated 1st March 1915, remitted to the Court of Session with the direction to assoilzie the defenders from the conclusion of the summons with certain reservations. The present action has been instituted by the appellants, the Glasgow and South-Western Railway Co., by summons dated 26th August 1916, against the respondents, Messrs. Boyd & Forrest, asking for a declarator as to the effect of your Lordships' Order of the 1st March 1915 in the former action, and for an interdict accordingly. The The claim in the former action was for £378,254, 2s. 2d., which sum it was alleged was due and resting-owing to the pursuers. their statement of facts that the work was done defenders (the railway company) pleaded in under a lump sum contract by which the work was to be executed for £243,000 plus the price of extras, and that with extras and certain allowances the total amount due was £272,030, which had been paid. The pursuers (the contractors) lodged pleas in law, the third of which was as follows: "The contract founded upon by the defenders is inapplicable as the basis of charge for the work executed by the pursuers, and is no longer binding upon the pursuers, in respect (a) that said contract was induced by the fraud of the defenders; (b) that said contract was entered into by the pursuers under essential error induced by the misrepresentations of the defenders; 1917. OF LORDS. and South HOUSE (c) that the work as executed by the pursuers proved to be entirely different from that conGlasgow templated by the contract; (d) that said contract Western was by agreement of parties departed from as Railway the basis of charge; and (e) that the defenders & Forrest. are by their actings barred from founding on said contract as the basis of charge." Co. v. Boyd December 14, 1917. A proof was ordered and the Lord Ordinary (Lord Johnston) found in favour of the pursuers on the plea of fraud. His finding was affirmed by the Inner House, but on appeal your Lordships' House by Order of the 3rd April 1913 found that the pursuers had failed to establish that the contract was induced by fraud, and ordered: "That the said cause be, and the same is hereby, remitted back to the Court of Session in Scotland, with directions (1) to repel branch (a) of the respondents' said third plea in law; (2) to repel branches (b) and (e) of the said plea in law, in so far as the same are founded or maintained on allegations of fraud against the appellants; and (3) to hear and dispose of the whole pleas and contentions of the parties, except in so far as repelled in terms of the foregoing directions, and to do in the cause as shall be just and consistent with these declarations, findings, and directions and this judgment." The Court of Session, after a further hearing, pronounced an interlocutor of 7th February 1914, the material part of which is as follows: "Find that the pursuers entered into the contract libelled under essential error, induced by misrepresentation and concealment on the part of the defenders; find further that the defenders were in breach of obligations under the said contract, and that the breaches committed went to the root and consideration of the contract. Therefore sustain branches (b) and (e) of the third plea in law for the pursuers; repel branches (c) and (d); find further that the pursuers are entitled to be paid for the work done by them for the defenders on a basis of quantum meruit." An appeal was brought to your Lordships' House by the Glasgow and South-Western Railway Co. and there was a cross appeal by Messrs Boyd & Forrest against that part of the interlocutor of the 7th February 1914 which repelled branch (c) of the pursuers' plea in law above set out. Your Lordships' House on the 1st March 1915 made the Order, the construction of which is in question on the present appeal. The Order allowed the appeal and disallowed the cross appeal, and proceeded as follows: "And it is further ordered, that the said cause be, and the same is hereby, remitted back to the Second Division of the Court of Session in Scotland, to do therein as shall be just and consistent with this judgment, and to assoilzie the defenders in the action from the conclusions of the summons, finding the pursuers liable in expenses accordingly: But it is provided that this Order and such decree of absolvitor be without prejudice to the right of the respondents in the original appeal, and it is hereby declared that the respondents in the original appeal are to have the right, if so advised, to refer to thearbiter named in the contract all claims, whether for damages or otherwise, under the contract, or in respect of breach thereof, provided such claims. are condescended upon in the pursuers' condescendence in this action, and provided that they relate to (a) the construction of bridge 12A and the diversion of the Paisley water-pipe, or (b) any delay on the part of the appellants in the original appeal in furnishing plans for dealing with water-courses encountered in the cuttings." The Court of Session accordingly granted absolvitor, and the result of these proceedings. was this. The contractors had claimed that the railway company were indebted to them in a large sum. The railway company set up the contract under which the work had been done and payment of the amount due under the contract. The contractors attempted to get rid of the contract, first on the ground of fraud, and then on the ground of essential error. They failed on both these points and absolvitor was pronounced. They now claim to be entitled to a large amount on the basis of the contract, alleging that under it they can go to arbitration and have an award on the question of liability.. It is admitted that all the amounts now claimed were included in the claim in the action in which absolvitor was pronounced. The ground on which this claim is put forward is this-they contend that what was decided in the former action was that the contract could not be got rid of, and that it is now open to them to say that on the basis of the contract they are entitled to go to arbitration. In my opinion this contention must fail. The moneys now claimed were claimed in the action in which absolvitor was granted, and, as that judgment stands, the claim is barred. It is, of course, true that if the action had been one to reduce the contract on the ground of fraud or essential error its failure would have been no bar to another action on the footing of the contract. The media concludendi in the two cases would have been different. In the first it would have been invalidity of the contract by reason of fraud or essential error; in the second, that the money was due under the contract itself. But here the medium concludendi is the same. The action was a petitory one to recoverso much money on the footing that it was due and owing from the defenders to the pursuers. The decree of absolvitor put an end to any such claim. It was quite open to the pursuers if they had pleased to have set up in reply to the defence of the contract that even if the contract stood, the money claimed, or some part of it, would be due on its true construction, and if this contention had been established they would have recovered in the petitory action any money |