Krell v Henry - [1900-03] All ER Rep 20 PDF

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All ER Reprints*/[1900-3] All ER Rep/Krell v Henry - [1900-03] All ER Rep 20

[1900-03] All ER Rep 20

Krell v Henry Also reported [1903] 2 KB 740; 72 LJKB 794; 89 LT 328; 52 WR 246; 19 TLR 711

COURT OF APPEAL Vaughan Williams, Romer and Stirling LJJ 13, 14 and 15 July 1903

Contract – Frustration – State of things foundation of contract – Destruction by event not in contemplation of parties – Extrinsic evidence as to surrounding facts and knowledge of parties when making contract – Contract for hire of seats to view coronation processions – Cancellation of processions

Where a condition or state of things clearly appears by extrinsic evidence to have been assumed by the parties to a contract to be the foundation or basis of the contract and as essential to its performance, and an event which is of such a character that it cannot reasonably be supposed to have been in the contemplation of the contracting parties when the contract was made renders it impossible to perform the contract, the parties are discharged from further performance of the contract This principle is not limited to cases in which the event causing the impossibility of performance is the destruction or non-existence of something which is the subject-matter of the contract or of some condition or state of things expressly specified as a condition of it The surrounding facts and the knowledge of the parties of those facts must be taken into consideration The plaintiff, who was the tenant of rooms the windows of which commanded a view of the route of the intended coronation processions on 26 and 27 June 1902, agreed with the defendant that he should have possession of them on those days in consideration of a payment of 75 pounds The coronation was postponed and no processions took place Held: the use of the rooms was let and taken for the particular purpose of viewing the processions, and no other; pared evidence was admissible to show that the happening of the processions and a view thereof was the peculiar contract; it was not in the contemplation of the parties that the processions would not take place; the non-happening of the processions prevented the performance of the contract; and the contract was discharged Taylor v Caldwell (1) (1863) 3 B & S 826, applied

Notes

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In Maritime National Fish, Ltd v Ocean Trawlers, Ltd, LORD WRIGHT pointed out that the correctness of the decision in Krell v Henry was questioned by LORD FINLAY, LC, in Larrinaga & Co, Ltd v Société FranceAméricaine des Phosphates de Médulla, Paris, [1923] All ER Rep 1, and himself said: "The authority is certainly not one to be extended": see [1935] All ER Rep 88, 89 As to the recovery of sums paid under a frustrated contract see Law Reform (Frustrated Contracts) Act, 1943, ss 1, 2 (4 HALSBURY'S STATUTES (2nd Edn) 662) Distinguished: Larrinaga & Co, Ltd v Société Franco- Américaine des Phosphates de Médulla, Paris (1922) 27 Com Cas 160 Considered: First Russian Insurance Co v London and Lancashire Insurance Co,[1928] Ch 922; Maritime National Fish, Ltd v Ocean Trawlers, Ltd,[1935] All ER Rep 86; Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour, Ltd,[1942] 2 All ER 122 Referred to: Elliott v Crutchley,[1903] 2 KB 476; Associated Portland Cement Manufacturers (1900) Ltd v Cory (1915) 31 TLR 442; Re Shipton, Anderson and Harrison,[1915] 3 KB 676; FA Tamplin Steamship Co v Anglo-Mexican Petroleum Products Co, [1915] 3 KB 668; Fosters Agency v Romaine (1916) 32 TLR 331; Berthoud v Schweder (1915) 31 TLR 404; London and Northern Estates Co v Schlesinger, [1914-15) All ER Rep 593; Horlock v Beal,[1916-17] All ER Rep 81; Leiston Gas Co, Ltd v Leiston-cum-Sizewell UDC,[1916-17] All ER Rep 329;Lloyd Royal Belge Société Anonyme v Stathatos (1917) 33 TLR 390; Scottish Navigation Co v Souter, Admiral Shipping Co v Weidner, Hopkins et Co,[1917] 1 KB 222; Blackburn Bobbin Co v Allen (1918) 87 LJKB 1085; Re Badische Co, Bayer Co, etc,[1921] 2 Ch 331; Larrinaga & Co, Ltd v Société Franco-Américaine des Phosphates de Médulla, Paris,[1923] All ER Rep 1; Cohen v Sellar,[1926] All ER Rep 312; First Russian Insurance Co v London and Lancashire Insurance Co,[1928] Ch 922; The Penelope,[1928] P 180; Hyman v Hyman, Hughes v Hughes, [1929] P 1; May v May, [1929] All ER Rep 484; Bell v Lever Bros, Ltd, [1931] All ER Rep 1; Tatem, Ltd v Gamboa,[1938] 3 All ER 135; Joseph Constantine Steamship Line, Ltd v Imperial Smelting Corpn, Ltd, The Kingswood,[1941] 2 All ER 165; Swift v Macbean,[1942] 1 All ER 126; Unger v Preston Corpn,[1942] 1 All ER 200; Re Sergeant (1948) 29 Ry & Can Tr Cas 84; Arab Bank, Ltd v Barclays Bank (DC & O) [1953] 2 All ER 263 As to doctrine of frustration, see 8 HALSBURY'S LAWS (3rd Edn) 185-194, and for cases see 12 DIGEST (Repl) 436 et seq Cases referred to:

(1) Taylor v Caldwell (1863) 3 B & S 826; 2 New Rep 198; 32 LJQB 164; 8 LT 356; 27 JP 710; 11 WR 726; 122 ER 309; 12 Digest (Repl) 418, 3242. (2) Nickell and Knight v Ashton, Edridge & Co, [1901] 2 KB 126; 70 LJKB 600; 84 LT 804; 49 WR 513; 17 TLR 467; 9 Asp MLC 209; 6 Com Cas 150, CA; 12 Digest (Repl) 430, 3308. (3) Baily v De Crespigny (1869) LR 4 QB 180; 10 B & S 1; 38 LJQB 98; 19 LT 681; 33 JP 164; 17 WR 494; 12 Digest (Repl) 420, 3249. (4) Jackson v Union Marine Insurance Co (1873) LR 8 CP 572; 42 LJCP 284; 22 WR 79; affirmed (1874) LR 10 CP 125; 44 LJCP 27; 31 LT 789; 23 WR 169; 2 Asp MLC 435, ExCh; 12 Digest (Repl) 438, 3339. (5) The Moorcock (1889) 14 PD 64; 58 LJP 73; 60 LT 654; 37 WR 439; 5 TLR 316; 6 Asp MLC 373, CA; 12 Digest (Repl) 686, 5274. (6) Hamlyn & Co v Wood & Co, [1891] 2 QB 488; 60 LJQB 734; 65 LT 286; 40 WR 24; 7 TLR 731, CA; 12 Digest (Repl) 684, 5266. (7) Harris and Taylor v Dreesman (1854) 23 LJ Ex 210; 18 JP 458; 41 Digest 456, 2870.

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(8) Mumford v Gething (1859) 7 CBNS 305; 29 LJCP 105; 1 LT 64; 6 Jur NS 428; 8 WR 187; 141 ER 834; 12 Digest (Repl) 204, 1429. (9) Price v Mouat (1862) 11 CBNS 508; 2 F & F 529; 142 ER 895; 12 Digest (Repl) 169, 1087. (10) Macdonald v Longbottom (1860) 1 E & E 977, 987; 29 LJQB 256; 2 LT 606; 6 Jur NS 724; 8 WR 614; 120 ER 1181, ExCh; 39 Digest 400, 369. (11) Lloyd v Guibert (1865) LR 1 QB 115; 6 B & S 100; 35 LJQB 74; 13 LT 602; 2 Mar LC 283; 122 ER 1134, ExCh; 12 Digest (Repl) 418, 3243. (12) Stubbs v Holywell Rail Co (1867) LR 2 Exch 311; 36 LJ Ex 166; 16 LT 631; 15 WR 769; 12 Digest (Repl) 666, 5154. Also referred to in argument: Appleby v Myers (1867) LR 2 CP 651; 36 LJCP 331; 16 LT 669, Ex Ch; 12 Digest (Repl) 696, 5334. Boast v Firth (1868) LR 4 CP 1; 38 LJCP 1; 19 LT 264; 17 WR 29; 12 Digest (Repl) 425, 3271. Howell v Coupland (1876) 1 QBD 258; 46 LJQB 147; 33 LT 832; 40 JP 276; 24 WR 470, CA; 12 Digest (Repl) 429, 3304. Pardine v Jane (1647) Aleyn, 26; Sty 47; 82 ER 897; 12 Digest (Repl) 417, 3236 . [1900-03] All ER Rep 20 at 21 Barker v Hodgson (1814) 3 M & S 267; 105 ER 612; 12 Digest (Repl) 439, 3347. Hills v Sughrue (1846) 15 M & W 253; 153 ER 844; sub nom Mills v Seybourne, 6 LTOS 414; 12 Digest (Repl) 431, 3311. Brown v Royal Insurance Co (1859) 1 E & E 853; 28 LJQB 275; 33 LTOS 134; 5 Jur NS 1255; 7 WR 479; 120 ER 1131; 12 Digest (Repl) 432, 3316. Bealey v Stuart (1862) 7 H & N 753; 31 LJ Ex 281; 8 Jur NS 389; 158 ER 672; 12 Digest (Repl) 706, 5392. Kennedy v Panama, etc, Mail Co (1867) LR 2 QB 580; 8 B & S 571; 36 LJQB 260; 17 LT 62; 15 WR 1039; 12 Digest (Repl) 260, 2020. Re Arthur, Arthur v Wynne (1880) 14 Ch D 603; 49 LJ Ch 556; 43 LT 46; 28 WR 972; 12 Digest (Repl) 427, 3285. London Founders Association v Clarke (1888) 20 QBD 576; 57 LJQB 291; 59 LT 93; 36 WR 489; 4 TLR 377, CA; 9 Digest (Repl) 365, 2337.

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Turner v Goldsmith, [1891] 1 QB 544; 60 LJQB 247; 64 LT 301; 39 WR 547; 7 TLR 233, CA; 12 Digest (Repl) 431, 3312. Ashmore & Son v C S Cox & Co, [1899] 1 QB 436; 68 LJQB 72; 15 TLR 55; 4 Com Cas 48; 12 Digest (Repl) 432, 3318. Blakeley v Muller & Co, Hobson v Pattenden & Co, [1903] 2 KB 760, n; 88 LT 90; 67 JP 51; 19 TLR 186; 47 Sol Jo 239, DC; 12 Digest (Repl) 463, 3455. Wood v Leadbitter (1845) 13 M & W 838; 14 LJ Ex 161; 4 LTOS 433; 9 JP 312; 9 Jur 187; 153 ER 351; 30 Digest (Repl) 542, 1771. Kerrison v Smith, [1897] 2 QB 445; 66 LJQB 762; 77 LT 344; 30 Digest (Repl) 539, 1732. Puller v Staniforth (1809) 11 East, 232; 103 ER 993; 41 Digest 462, 2936. Cutter v Powell (1795) 6 Term Rep 320; 101 ER 573; 12 Digest (Repl) 463, 3454. Whincup v Hughes (1871) LR 6 CP 78; 40 LJCP 104; 24 LT 76; 19 WR 439; 12 Digest (Repl) 261, 2022. Carter v Boehm (1766) 3 Burr 1905; 1 Win Bl 593; 97 ER 1162; 29 Digest 36, 3.

Appeal by the plaintiff from a decision of DARLING, J, in an action tried by him without a jury The plaintiff, Paul Krell, sued the defendant, C S Henry, to recover 50 pounds, being the balance of a sum of 75 pounds, at which price the defendant had agreed to hire from the plaintiff some rooms at 56A, Pall Mall, London, of which the plaintiff was tenant, on 26 and 27 June 1902, to view the processions which it had been intended to hold on those days in connection with the coronation of His Majesty King Edward VII. The defendant denied that he was liable to pay the 50 pounds, and counterclaimed for the return of 25 pounds which he had paid as a deposit, on the ground that, the processions not having taken place owing to the illness of the King, there had been a total failure of consideration for the contract entered into by him On 11 August 1902, the action came on for trial before DARLING, J, sitting without a jury, when the learned judge gave judgment for the defendant on both claim and counterclaim The plaintiff appealed Spencer Bower, KC, and Holman Gregory for the plaintiff Duke, KC, and Ricardo for the defendant

Cur adv vult

11 August 1903

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VAUGHAN WILLIAMS LJ:

(read the following judgment) The real question in this case is the extent of the application in English law of the principle of the Roman law which has been adopted and acted on in many English [1900-03] All ER Rep 20 at 22 decisions, and notably in Taylor v Caldwell (1) That case at least makes it clear that "where, from the nature of the contract, it appears that the parties must from the beginning have known that it could not be fulfilled unless, when the time for the fulfilment of the contract arrived, some particular specified thing continued to exist, so that when entering into the contract they must have contemplated such continuing existence as the foundation of what was to be done; there, in the absence of any express or implied warranty that the thing shall exist, the contract is not to be construed as a positive contract, but as subject to an implied condition that the parties shall be excused in case, before breach, performance becomes impossible from the perishing of the thing without default of the contractor"

Thus far it is clear that the principle of the Roman law has been introduced into the English law The doubt in the present case arises as to how far this principle extends The Roman law dealt with obligationes de certo corpore Whatever may have been the limits of the Roman law, Nickoll and Knight v Ashton, Edridge & Co (2) makes it plain that the English law applies the principle not only to cases where the performance of the contract becomes impossible by the cessation of existence of the thing which is the subject-matter of the contract, but also to cases where the event which renders the contract incapable of performance is the cessation or nonexistence of an express condition or state of things, going to the root of the contract, and essential to its performance It is said, on the one side, that the specified thing, state of things, or condition the continued existence of which is necessary for the fulfilment of the contract, so that the parties entering into the contract must have contemplated the continued existence of that thing, condition, or state of things as the foundation of what was to be done under the contract, is limited to things which are either the subject- matter of the contract, or a condition or state of things, present or anticipated, which are expressly mentioned in the contract But, on the other side, it is said that the condition or state of things need not be expressly specified, but that it is sufficient if such condition or state of thing, clearly appears by extrinsic evidence to have been assumed by the parties to be the foundation or basis of the contract and the event which causes the impossibility is of such a character that it cannot reasonably be supposed to have been in the contemplation of the contracting parties when the contract was made In such a case the contracting parties will not be held bound by general words which, though large enough to include, were not used with reference to a possibility of a particular event rendering performance of the contract impossible I do not think that the principle of the civil law as introduced into the English law is limited to cases in which the event causing the impossibility of performance is the destruction or non-existence of some thing which is the subject-matter of the contract or of some condition or state of things expressly specified as a condition of it I think that you first have to ascertain, not necessarily from the terms of the contract, but if necessary from necessary inferences, drawn from surrounding circumstances recognised by both contracting parties, what is the substance of the contract, and then to ask the question whether that substantial contract needs for its foundation the assumption of the existence of a particular state of things If it does, this will limit the operation of the general words, and in such case if the contract becomes impossible of performance by reason of the

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non-existence of the state of things assumed by both contracting parties, as the foundation of the contract, there will be no breach of the contract thus limited What are the facts of the present case? The contract is contained in two letters of 20 June 1902, which passed between the defendant and the plaintiff's agent, Mr Cecil Bisgood These letters do not mention the coronation, but speak merely of the taking of Mr Krell's chambers, or, rather, of the use of them, in the daytime of 26 and 27 June 1902, for the sum of 75 pounds, 25 pounds then paid, balance 50 pounds to be paid [1900-03] All ER Rep 20 at 23 on the 24th But the affidavits, which by agreement between the parties are to be taken as stating the facts of the case, show that the plaintiff exhibited on his premises, third floor, 56A, Pall Mall, an announcement to the effect that windows to view the royal coronation processions were to be let, and that the defendant was induced by that announcement to apply to the housekeeper on the premises, who said that the owner was willing to let the suite of rooms for the purpose of seeing the royal procession for both days, but not nights, of 26 and 27 June In my judgment, the use of the rooms was let and taken for the purpose of seeing the royal processions It was not a demise of the rooms or even an agreement to let and take the rooms It was a licence to use rooms for a particular purpose and none other And in my judgment the taking place of those processions on the days proclaimed along the proclaimed route, which passed 56A, Pall Mall, was regarded by both contracting parties as the foundation of the contract I think that it cannot reasonably be supposed to have been in the contemplation of the contracting parties, when the contract was made, that the coronation would not be held on the proclaimed days, or the processions not take place on those days along the proclaimed route; and I think that the words imposing on the defendant the obligation to accept and pay for the use of the rooms for the named days, although general and unconditional, were not used with reference to the possibility of the particular contingency which afterwards occurred It was suggested in the course of the argument that if the occurrence, on the proclaimed days, of the coronation and the processions in this case were the foundation of the contract, and if the general words are thereby limited or qualified, so that in the event of the non-occurrence of the coronation and processions along the proclaimed route they would discharge both parties from further performance of the contract, it would follow that if a cabman was engaged to take someone to Epsom on Derby-day at a suitable enhanced price for such a journey, both parties to the contract would be discharged in the contingency of the race at Epsom for some reason becoming impossible, but I do not think this follows, for I do not think that in the cab case the happening of the race would be the foundation of the contract No doubt the purpose of the engager was to go to see the Derby, and that the price was proportionately high; but the cab had no special qualifications for the purpose which led to the selection of the cab for this particular occasion Any other cab would have done as well Moreover, I think that, under the cab contract, the hirer, even if the race went off, could have said: "Drive me to Epsom, I will pay you the agreed sum, you have nothing to do with the purpose for which I hired the cab" - and that if the cabman refused he would have been guilty of a breach of contract, there being nothing to qualify his promise to drive the hirer to Epsom on a particular day, whereas, in the case of the coronation, there is not merely the purpose of the hirer to see the coronation processions, but it is the coronation processions and the relative position of the rooms which is the basis of the contract as much for the lessor as the hirer; and I think that if the King, before the coronation day and after the contract, had died, the hirer could not have insisted on having the rooms on the days named It could not in the cab case be reasonably said that seeing the Derby race was the foundation of the contract, as viewing the processions was of the licence in this case, whereas, in the present case, where the rooms were offered and taken, by reason of their peculiar suitability from the position of the rooms for a view of the coronation processions, surely the view of the coronation processions was the foundation of the contract, which is a very different thing from the purpose of the man who engaged the cab - viz, to see the race - being held to be the foundation of the contract Each case must be judged by its own circumstances In each case one must ask oneself, first: What, having regard to all the circumstances, was the foundation of the contract?; secondly: Was the performance of the

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contract prevented?; and thirdly: Was the event which prevented the performance of the contract of such a character that it cannot reasonably be said to have been in the contemplation of [1900-03] All ER Rep 20 at 24 the parties at the date of the contract? If all these questions are answered in the affirmative (as I think they should be in this case) I think both parties are discharged from further performance of the contract I think that the coronation processions were the foundation of this contract, and that the non-happening of them prevented the performance of the contract; and, secondly, I think that the non-happening of the processions, to use the words of SIR JAMES HANNEN in Baily v De Crespigny (3) (LR 4 QB at p 185) was an event "of such a character that it cannot reasonably be supposed to have been in the contemplation of the contracting parties when the contract was made, and that they are not to be held bound by general words which, though large enough to include, were not used with reference to the possibility of the particular contingency which afterwards happened"

The test seems to be, whether the event which causes the impossibility was or might have been anticipated and guarded against It seems difficult to say, in a case where both parties anticipate the happening of an event, which anticipation in the foundation of the contract, that either party must be taken to have anticipated, and ought to have guarded against, the event which prevented the perfo...