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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Stiven v. Watson [1874] ScotLR 11_223 (31 January 1874) URL: http://www.bailii.org/scot/cases/ScotCS/1874/11SLR0223.html Cite as: [1874] ScotLR 11_223, [1874] SLR 11_223 |
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Page: 223↓
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Where A agreed to receive and hold certain goods for behoof of B, to be forwarded by C, and failed to intimate the delivery order of the goods, in consequence of which C got delivery within sixty days of his becoming bankrupt: In an action for damages at the instance of B against A,— Held (1) that the transaction did not constitute an illegal preference contrary to the Act 1696, c. 5. (2) That A was liable in damages for breach of obligation.
This was an action at the instance of Edward Baxter Stiven, merchant, Dundee, against Alexander Don Watson, flax-spinner, Fife, for £100 in name of damages, with interest from 19th October 1872. The facts out of which the suit arose were as follows:—On 16th August 1872 the pursuer purchased from Messrs Annan & Co., Fife, 2,000 spindles yarn, to be delivered as he might require, and granted a bill to them for £200 as the price, payable two months after date, which bill was duly returned by the pursuer to the holder to whom it had been indorsed. Annan & Co. delivered part of the yarn, but after 3d September 1872 made no deliveries. On 2d October 1872 Annan & Co. undertook to forward five tons of tow represented by them as their property, and lying in Dundee, to Dairsie Station, and to grant delivery order therefor in favour of the defender or his firm of Alexander Watson & Son, in order that the firm should hold the tow for behoof of the pursuer until delivery by Annan & Co. to the pursuer of the remainder
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of the yarn purchased by them or make payment of the price. The defender agreed to receive and hold the tow accordingly. Annan & Co. purchased the tow, and directed it to be forwarded in their name by railway to Dairsie, and handed to the pursuer delivery order in the following terms:—“Pitscottie Mains, October 2, 1872. To the station-master, Darsie.—Dear Sir, Please deliver to Messrs Alex. Watson & Son, Blebo Works, say five tons tow forwarded from Dundee on our account.—Yours truly (signed) James Annan & Co.” The pursuer sent this order of the same date to the defender with a letter to the following effect:—“‘In accordance with our arrangement to-day, I send you order for five tons tow, from Mr James Annan, which please receive and hold for my account until he pays me for or delivers the yarn already paid for.” The defender received the order but failed to intimate the order to the station-master at Dairsie, in consequence of which Annan & Co. obtained delivery of the tow. They became bankrupt on or about 18th October 1872. The damages sued for in this action were these caused by the failure of the defender to intimate said delivery order. The pleas in law for the pursuer were—“‘(1) The defender having agreed to receive delivery and hold possession of said tow for behoof of the pursuer, and having failed to do so, he is liable for the loss and damage which the pursuer has sustained in consequence. (2) The defender having wrongfully failed to intimate the delivery order for the tow in question, and allowed the same to be removed without the knowledge or consent of the pursuer, he is liable to make payment of the sum concluded for; and decree should be pronounced accordingly.”
The main plea for the defender was—“‘(2) Esto that the said tow had been delivered to the defender, the transaction, as averred by the pursuer, was null and void, as being a security or satisfaction given by Annan & Co. to the pursuer in preference to his other creditors within sixty days of bankruptcy; and the pursuer has not suffered any loss or damage through the alleged failure of the defender to intimate said delivery order.”
The Lord Ordinary pronounced the following interlocutor and note:—
“ Edinburgh, 24 th October 1873.—The Lord Ordinary having considered the cause—Finds that on 16th August 1872 the pursuer purchased from Messrs James Annan & Co., Pitscottie Mills, Fife, 2000 spindles yarn, to be delivered as he might require, and granted a bill to them for £200, as the price thereof, payable two months after date, which he duly retired when it fell due, by payment to the holders thereof, to whom the same had been endorsed: Finds that the said James Annan & Co. delivered to the pursuer 1020 spindles of said yarn, the last delivery having been on or about 3d September 1872, but failed to make further deliveries though repeatedly called on to do so by the pursuer: Finds that on 2d October 1872 the pursuer having required the said James Annan & Co. at once to complete the delivery of yarn purchased by him, and having threatened to take legal proceedings to compel delivery, the said James Annan & Co. undertook forthwith to forward a quantity of five tons or thereby of tow represented by them as belonging to them, and lying in Dundee, to Dairsie Station, and to grant delivery order therefor in favour of the defender, or his firm of Alexander Watson & Son, Blebo Works, in order that the defender should hold the tow under the delivery order for behoof of the pursuer until Messrs Annan & Co. should deliver to the pursuer the remainder of the yarn purchased by him, or should pay him therefor, and that the defender agreed and undertook to receive and hold the tow to be forwarded for behoof of the pursuer accordingly: Finds that, in consequence of this arrangement and the said undertaking by the defender, the pursuer refrained from adopting legal proceedings against James Annan & Co.: Finds that on said 2d October James Annan & Co. having completed a purchase of tow about which they had been previously negotiating with Samuel Thomson, commission merchant, Dundee, directed the same to be forwarded in their name by railway to Dairsie, and in implement of the arrangement above mentioned handed to the pursuer a delivery order in the following terms:—‘ Pitscottie Mills, 2 d October, 1872. To the station-master, Dairsie.—Dear Sir, Please deliver to Messrs Alex. Watson & Son, Blebo Works, say five tons of tow forwarded from Dundee on our account.—Yours truly, (signed) Jas. Annan & Co.’: Finds that on the same date the pursuer sent this delivery order by post to the defender, with a letter in the following terms:—‘Memorandum.—From Edward Baxter Stiven, Coupar's Alley, to Alexander D. Watson, Esq., Blebo Works, Dundee. Dundee, 2 d October, 1872. My Dear Sir, In accordance with our arrangement to-day, I send you order for five tons tow, from Mr James Annan, which please receive and hold for my account, until he pays me for, or delivers, the yarn already paid for.—Yours very truly, (signed) E. Baxter Stiven,’ and that the defender received the delivery order and letter on 3d October: Finds that Mr Thomson, between 3d and 7th October, forwarded as directed upwards of five tons of tow by railway to the address of James Annan & Co., at Dairsie: Finds that the defender, in breach of his undertaking to the pursuer, failed to intimate the delivery order above mentioned to the station-master at Dairsie, and to receive and hold the said tow for behoof of the pursuer in terms of his undertaking, and that in consequence of his failure duly to intimate the delivery order Messrs James Annan & Co. were enabled to obtain delivery of the tow and took delivery thereof without having previously delivered to the pursuer the remainder of the yarn purchased by him, or paid to him the price or value thereof; and that on or about 18th October they became bankrupt: Finds that in consequence of the defender's breach of his said undertaking to the pursuer, the pursuer has sustained loss and damage to the extent of £100, with interest from 19th October 1872, at the rate of five per cent., but under deduction of the sum of £32, 10s. received by him as a dividend on a claim lodged by him on the sequestrated estate of James Annan & Co.: Therefore decerns against the defender for the sum of £100 and interest, under deduction as aforesaid; the pursuer on obtaining payment being bound to assign to the defender his right to any further dividend payable in respect of his claim on said estate: Finds the defender liable in expenses, of which allows an account to be given in, and remits the same when lodged to the Auditor to tax and report.
Note.—In the presentaction the questions raised for decision are, whether the defender undertook the obligation libelled, and committed a breach of it? and whether, even assuming a breach of the obligation, any damage has resulted to the pursuer?
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On these questions the Lord Ordinary is of opinion that the pursuer has established his averments on record.
On the 2d October 1872 Messrs James Annan & Co., who became bankrupt on the 18th of the same month, were under obligation to the pursuer to deliver him 980 spindles of yarn, being part of a quantity of 2000 spindles purchased in August previously, to be delivered when required. The pursuer, who had granted his acceptance for the price, had repeatedly demanded delivery of the yarn. He had before the 2d October received two delivery orders, one upon the North British Railway Company at Dundee, and the other upon Mr James Guthrie, commission broker there, both of which had turned out worthless, as neither of these parties held yarn belonging to Annan & Co. On that day he called at Annan & Co.'s premises, pressing for delivery, and insisted that they should give him a quantity of yarn, which he saw they had in their warehouse. The defender, who is connected by marriage with both parties, was therefore waited on by Mr Annan, and after some conversation it is proved, in the opinion of the Lord Ordinary, that he became a party to the arrangement, which the Lord Ordinary has found by the preceding interlocutor was entered into, and that in consequence the pursuer refrained from taking any legal steps against Annan. There is a conflict between the evidence of the pursuer and defender, who are the only persons able to speak to what took place at the meeting on the 2d October, (Mr Annan having become insane) but on the whole the Lord Ordinary is satisfied that the pursuer was more accurate in his recollection of what occurred, and he is completely corroborated by the documents written on the day of the meeting, and which refer to the arrangement made, and were received by the defender without any observation to the effect that they were not in accordance with what had been agreed to. The agreement was, not that the pursuer should accept the tow to be held by the defender as a substitute for the yarn which he had purchased, but that the tow should be held for the pursuer's account until Mr Annan should deliver the yarn, or pay its price or value to the pursuer. The defender got the delivery order and the pursuer's letter on the 3d of October. His place of business is about a mile from Dairsie Station, and the order might have been intimated to the station-master at once, but it was never intimated at all, and in consequence Annan & Co. were enabled without any impediment to obtain delivery of the tow which was forwarded between the 3d and 8th October, and improperly applied for and took delivery of it. The Lord Ordinary is of opinion that the defender's failure to intimate the delivery order was a breach of his undertaking to the pursuer, and that if the order had been duly intimated in fulfilment of the defender's obligation the station-master would have been able to retain either the whole of the tow or a large part of it, and would have been bound to do so. It was pleaded for the defender that Annan & Co. having at once taken delivery in the course of the 4th October of a great part of the tow forwarded immediately after its arrival on that day, the intimation of the delivery order would have been of no avail, but the Lord Ordinary is of opinion that the defender was bound under his undertaking to have intimated the delivery order on the morning of the 4th October, in which case he would have detained all the tow, and it is clear that intimation even between that date and the 7th would have laid an embargo on a considerable quantity of the goods.
The remaining question is, whether the pursuer has suffered damage from the defender's failure to fulfil his undertaking? On this point it was argued for the defender, that even if he had detained and taken possession of the tow, the pursuer would in the end have been no gainer, for Annan & Co.'s bankruptcy having followed within sixty days, the tow could not have been retained for the pursuer's security, but must have been given up to their creditors, or to any one of them (the defender himself being one) who might challenge the transaction as a preference contrary to the Act 1696, and that the transaction was truly the giving of security for a prior debt, to the prejudice of other creditors. The Lord Ordinary deems it unnecessary to form a definite conclusion on the question whether, if the goods had been detained and held by the defender till Annan & Co.'s bankruptcy occurred, the pursuer could have retained them in the security of his claim or debt in a question with that firm's creditors. His opinion rather is that the creditors could have insisted on the goods being given up to them. But it is not the pursuer's case that he wished or expected as the result of the fulfilment by the defender of his obligation that the goods should be kept even for the time which elapsed before the sequestration. His object was to put a pressure on Annan & Co. which would induce them immediately to fulfil in its terms their obligation to him, by delivering the remainder of the yarn they had purchased, or paying him its value; and if either of these things had been done, no question of illegal preference could have occurred. The goods were to be held by the defender till delivery of the yarn, or payment therefor, and the defender himself states that he expected delivery would be made without any delay. It is obviously, in Annan & Co.'s circumstances, a powerful spur or incentive to make such delivery that by doing so they would remove an embargo on a valuable parcel of goods to be used in their manufacture; and the probability is that if the defender had fulfilled his undertaking and detained the goods, the pursuer would have got delivery of his yarn or payment of its price from this cause. The security given by Annan & Co. on the 2d October was not at its date an illegal preference, for the bankrupts were then carrying on business as before, and, though in difficulties, did not contemplate bankruptcy, and when the defender, founding on the fact that bankruptcy occurred within sixty days after, maintained that thereby the security became a preference, it is, in the Lord Ordinary's opinion, a complete answer, that in the meantime, if the defender had fulfilled his obligation, the pursuer might, and probably would, have had his contract duly fulfilled, and Annan & Co. would have obtained delivery of the tow given as security. The Lord Ordinary is therefore of opinion that the pursuer sustained loss and damage to the amount claimed through the defender's failure to fulfil his obligation. There is some evidence about a quantity of tow held for the pursuer by the bankrupt's brother, but it appears to the Lord Ordinary that the pursuer never made any agreement to take this tow, and that he is not bound to do so. He must, of course, give to the defender any rights he may have to this or any other security against the bankrupt's estate on receiving payment of his present claim.”
The defender reclaimed.
Page: 226↓
Authorities quoted— Matthew, 6 Macph. 957; Ramsay, 16 D. 720; Taylor, 17 D. 639; Sedgwick on Damages, 99; Storey on Agency, § 218; 1 Bell's Com. (M'Laren's Ed.) 382; 1696, c. 5.
The Court adhered.
Counsel for Reclaimer— Trayner and Watson. Agents— Lindsay, Paterson & Hall, W.S.
Counsel for Respondent—Solicitor-General ( Clark) and G. Smith. Agents— Leburne, Henderson & Wilson, W.S.
