Scottish Court of Session Decisions

This was an action at the instance of Henrietta Alice Ashby or Hope, with the consent and concurrence of her husband John Alfred Hope, against the Derwent Rolling Mills Company, Limited, Working-ton, against whom arrestments had been used ad fundandam jurisdictionem, concluding for payment “of the sum of £500 sterling, being the amount contained in a bill of exchange, dated 19th February 1902, drawn by the female pursuer upon and accepted by the defenders, and payable on demand with interest.… Or otherwise, the defenders ought and should be decerned and ordained by decree foresaid, to make payment to the pursuer of the sum of £500 sterling, with interest.…” The words printed in italics were added by an amendment in virtue of an interlocutor of the Lord Ordinary, dated 12th December 1902. The record was closed on 13th January 1903.

The pursuers averred (Cond. 1) that by bill of exchange dated 19th February 1902, drawn by the female pursuer upon and accepted by the defenders, the latter bound themselves to pay to the said pursuer on demand the sum of £500 sterling for value received. They admitted that the acceptance was written by the secretary of the defendant company, and averred (Cond. 2) that the sum contained in the said bill was still due and resting-owing.

The defenders (Ans. 1) averred that the acceptance of the bill in name of the defendant company was written by John Cunningham, the secretary of the company, and was not authorised by the board of directors—“By the articles of association of the company it is provided.… ‘The board may, under special circumstances, authorise two directors and the secretary to draw, make, endorse, and accept bills of exchange and promissory-notes.’ The said acceptance in name of the said company was ultra vires of the said John Cunningham, and the defenders are not thereby bound. Both the pursuer and her husband knew when she took the said bill that the secretary had no authority to grant it, and that the defenders had received no value for the said bill.”

With regard to the circumstances in which the bill of exchange was granted the pursuers averred:—(Cond. 3) “In the beginning of February last the Derwent Company contracted to purchase from Le Bas & Co. of Billiter Street, London, a cargo of steel bars, and being short of funds and unable to uplift the Bills of lading for the said cargo, approached Mrs Hope through her husband, who was a member of the board, and requested an advance for this purpose. Mrs Hope attended a meeting of the directors on 5th February, and at that meeting agreed to advance the sum necessary to enable the company to uplift the bills of lading. Mrs Hope on the same day granted a cheque in favour of the company for £2000 for this purpose. On 15th February the bills of lading were uplifted. The amount required for this purpose was £2196, 17s. 3d. ( of which £196, 17s. 3d. was advanced by the company's bankers), and Mrs Hope advanced the company a further sum of £196, 17s. 3d. It was a condition of said [ transaction that the warrants representing the said cargo should be held subject to Mrs Hope's orders and released by her from time to time to such extent as should be required by the company, and that the company should pay to Mrs Hope the value of each lot of bars so released. When Mrs Hope was asked to release a second lot of bars the bill sued on was handed to her by the company on account of the value of said lot and the first lot released by her. The] advances that the company should grant Mrs Hope a bill for £500 payable on demand to secure her against loss in the realisation of the cargo, and the board agreed to grant it. In pursuance of said agreement the said bill was executed with the authority of the board. Mrs Hope has received from time to time the sum of ( £670) £866, 17s. 3d. in repayment of said loan, but the balance thereof, with interest, still remains due.”

[What is printed in italics was added on amendments—the portions within round brackets having been allowed by interlocutor of 16th December 1903, and the portion within square brackets by interlocutor of 16th December 1904; the portions underlined were deleted in the record.]

The defenders (Ans. 3) “admitted that the Derwent Company, prior to 15th February last, contracted to purchase from Le Bas & Co. a cargo of iron bars; that the company approached Mrs Hope in regard to the matter; and that on 15th February she agreed to purchase and take over the bars on her own account. On said date the bills of lading were uplifted by her, and she paid the price, viz., £2196, 17s. 3d. by cheque, in favour of Le Bas & Co.” [the cheque was for a sum of £2000]. They further admitted that the company had from time to time made payments to Mrs Hope, but explained that these payments were made on account of the price of bars received by the company from Mrs Hope.

With reference to the letters of arrestment to found jurisdiction against the defenders, the defenders averred—“The said letters of arrestment have been executed only with reference to the sum alleged to be contained in and due under the bill of exchange, being the debt originally sued for. The said letters are not competent to found jurisdiction with reference to the alleged loan of £500 said to be due

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apart from the bill, as set forth in the amendment added to the summons after the execution of the said letters of arrestment.”

The pursuers pleaded, inter alia—“(1) The sum sued for being due and restingowing to the female pursuer under the bill of exchange libelled, decree should be pronounced as concluded for, with expenses. (2) The female pursuer having advanced on loan to the defenders the sums above set forth [ or, in any event, having disbursed the same on behalf of the company and at their request], and the defenders being due and resting-owing to her in respect [ thereof] of said loans in a sum exceeding the sums sued for, the pursuers are [is] entitled to decree as concluded for. (5) The defences are irrelevant.”

[The words printed in italics were amendments allowed by interlocutor of 16th December 1904; the words underlined were deleted. ]

The defenders pleaded, inter alia—“(1) No jurisdiction quoad the alleged debt referred to in the alternative conclusion of the summons, added by way of amendment after execution of the letters of arrestment to found jurisdiction. (2) The pursuer's averments are irrelevant and insufficient to support the conclusions of the summons. (6) The averments of loan can only be proved by writ or oath of the defenders.”

Intimation of the action was made to Mr William B. Peat, who had been appointed by the English Courts receiver on defenders' estates, in order that he might sist himself, if so advised. On 4th July 1903 Peat was sisted as a defender.

A proof was led. The material facts disclosed in the proof are sufficiently set out in the opinions of the Lord Ordinary and the Lord President.

The bill founded on by the pursuers was in these terms:— “Derwent House,

Workington, 19 th Feb 1902.

“£500. Stp. 5/0d.

“On demand pay to me or my order the sum of Five hundred pounds for value received. ( Sgd.) H. A. Hope.

“ To Derwent Rolling Mills Co., Ltd. Workington.”

The following was written across the face of the bill:—

“Accepted payable at the York City and County Bank, Sheffield.

“ For Derwent Rolling Mills Co., Ltd.,

John Cunningham, Secretary.”

In a statement of account between the pursuer Mrs H. A. Hope and the defenders (No. 82 of process), dated 7th November 1902, there occurred this entry—“Feb. 15, 1902.—By cash received for bars £2196, 17s. 3d.” By joint minute of the parties it was admitted that, inter alia, No. 82 of process was a true copy of the original document.

The defenders' cash-book contained the following entries in pencil:—

Dr Feb. 15.—Mrs Hope.	£2196, 17s. 3d.
Cr Feb. 15.—E. Le Bas & Co.	£2196. 17s. 3d.

On 16th December 1904 the Lord Ordinary ( Kyllachy) decerned against the defenders, the Derwent Rolling Mills Company, Limited, for £500 as concluded for, and found the defenders liable in expenses.

Opinion.—… “What I have to decide is whether or not on the whole matter the defenders have any good defence to the pursuer's claim. I am of opinion in the negative, and I am disposed to think that when the case is understood no other result is possible.

“The facts—the relevant facts—are very simple, and are, I think, shortly these. The defenders' company had in the beginning of 1902 bought for the purposes of their works a cargo of iron bars to be paid for on ship's arrival, and exchange in due course of dock warrants for bill of lading. When the iron arrived the company were unable to pay the price, which turned out to be £2196. The iron was required, and if not got the company's rolling mills must have been stopped. In these circumstances the pursuer, who is the wife of the managing director and principal shareholder of the company, was applied to for an advance out of her separate estate of £2000 to enable the company to take up the warrants. She ultimately agreed, on being secured to the satisfaction of her solicitors, who were, as it happened, also the solicitors of the company's bankers. The result was an arrangement whereby by means of the £2000 which she provided, and £196 provided by the bank, the pursuer took up the warrants, doing so in her own name, but on the footing that she should release or deliver them to the company in lots as required, upon payment for each lot of a proportion of the disbursed price. She agreed also, in consideration of the company's bankers advancing the said £196, that they should hold the warrants to her order and on her behalf, but primarily in security to themselves (1) of the £196, and (2) of a previous advance of about £350 made by them to the company on the pursuer's guarantee. In the outcome of the transaction the pursuer received only about £670 to account of her £2000. For the rest, unfortunately for herself, she released the warrants, or allowed their delivery to the company, upon receipt only of the company's cheques, and not of cash. Of these cheques she has not yet got, and I am afraid is not likely to get, payment. She got, however, upon the release of the first two lots of warrants (about 100 tons) a bill for £500 payable on demand and signed by the company's secretary. For the amount of this bill she some time ago brought the present action, the bill being produced and founded upon. But the facts being as I have said, the summons was at an early stage amended, I think sufficiently, to cover any claim within the amount sued for, which upon the actual facts arose to the pursuer against the company.

“Such being the position—the facts being what I have said, and being really not in dispute—it should, one would have thought, have been difficult to find materials for litigation. The pursuer being undoubtedly

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creditor of the company for an amount largely exceeding the sum sued for, it would not have occurred to one as useful to inquire critically to what precise legal category the transaction should be referred. For the pursuer sued simply as an ordinary creditor of the company, and doing so, it could make no difference as to her right to decree that she had founded jurisdiction by arrestments, and had also used arrestments upon the dependence. The defenders' company, however, having got into difficulties, defences were lodged, and a receiver having been subsequently appointed, that official was sisted as a defender, and has thought it necessary to litigate, doing so, it appears, in the view that as acting for creditors it was his duty—as perhaps it was—to state all pleas, however technical, which might suffice to throw out the action, and so to destroy the arrestments. And the pleas which he has in this view maintained are, in substance, I think, these—(1) That the action, so far as rested on the bill, is bad, because the bill is not signed by two directors in terms of the articles of the company; (2) that so far as the action is founded on loan, the loan is not proved scripto as required by the law of Scotland; and (3) that the true legal category under which the pursuer's claim comes is not loan, but either mandate or sale and delivery, neither of which grounds of action are, it is said, properly pleaded upon record.

“Now, I am bound to say that for myself I see no substantial objection to the pursuer's action, even as laid on the bill. It may be true that the bill was not signed, as required by the articles of the company, by the secretary and two directors. But it is, I think, sufficiently proved that it was got by the pursuer in exchange for warrants of about equivalent value, which she released to the company at the time; and it seems to me that if the company desires to repudiate that transaction as ultra vires of their official, they can only do so by returning to the pursuer her warrants, which is not proposed, and is indeed now impossible.

“Apart therefore altogether from the amendment made on the summons when the action came into Court, and the additions to the condescendence thereafter made on adjustment (an amendment and additions entirely regular), I am not, as at present advised, prepared to say anything against the propriety of the action, even as originally laid. And I am the less prepared to do so because our rule of process (which in an action like this I suppose still requires the mention in the summons of any liquid document of debt on which the pursuer may propose to found) does not, as I understand it, preclude the pursuer from resting her case ultimately, not upon the document of debt itself, but upon the contract, whatever it is, which lies behind the document.

“Again, I see no particular difficulty—taking the record as it now stands—in maintaining the action, if that is desired, as an action laid upon loan. There may be a question whether in strictness the real contract between the parties was not rather the contract of mandate—the pursuer interposing and taking up the warrants on behalf of the company and at their request, and being entitled, by way of indemnity for what she disbursed, to a sum considerably exceeding the sum sued for. But the transaction may, nevertheless, I think, quite fairly be described as a loan; and as such it is, I cannot doubt, quite sufficiently proved scripto. It is so, inter alia, (1) By the pursuer's cheque which was endorsed by her husband on behalf of the company, and was, as so endorsed, delivered to her, and transmitted by her to the company's bankers to be used by them (as it was used) for the company's purposes; and (2) by entries in the company's books, which, although made in pencil, and made, as the secretary explains, at posting, are yet perfectly true entries, and constitute by our law the company's writ.

“Supposing, however, all this to be otherwise—supposing that the contract between the parties was really one of mandate, or supposing even (what I think is absurd) that the pursuer bought the iron on her own account and sold it to the company from time to time by ordinary sale—supposing either of these things, what does it matter? It involves at most certain amendments on the condescendence and on the pursuer's pleas—amendments which are not only competent, but which it is the duty of the Court to make if it be necessary for determining the real question between the parties. And if the pursuer desires it, I shall have no difficulty in allowing or making any amendment necessary. What the effect of those amendments or of the original amendment of the summons may be on the pursuer's arrestments I am not called on to decide. I am merely concerned at present with the decree to be pronounced in this action. But I shall be glad to hear, before signing the interlocutor, what the pursuer's counsel say on the subject of any further amendment. Subject to any question of expenses connected with such amendment, my opinion is that the pursuer is entitled to decree as concluded for, with full expenses against the company and also against the receiver.”

The defenders reclaimed, and argued—The original action was laid only on the bill of exchange, and under the articles of association of the defendant company that bill was bad. Arrestments fundandœ jurisdiction is causa founded jurisdiction only in the action as originally laid, and did not warrant decree in an action which had been fundamentally altered. Jurisdiction based on arrestment was limited in its effects and rested on a fiction—Voet, ii, 4, 22; Scruton v. Gray, December 1, 1772, M. 4822; Ersk. Inst. i, 2, 19; Young v. Arnold, 1683, M. 4833; Ashton v. Mackrill, June 17, 1773, M. 4835; Cameron v. Chapman, March 9, 1838, 16 S. 907; Bertrams v. Barry & Bruce, March 6, 1821, F.C. (20 F.C. 309). The nexus laid on the foreigner's goods was loosed so soon as he gave security judicio sisti—Ersk. Inst. i, 2, 19. The forms

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of letters of arrestment to found jurisdiction—Jurid. Styles, 1st ed., 1794, vol. ii, 439, 2nd ed., 1828, vol. iii, 553, 3rd ed. 1888, vol. iii, 305—were referred to— Parnell v. Walter, July 3, 1889, 16 R. 917, at p. 924, 27 S.L.R. 1. The arrestment had not the effect of subjecting the arrestee to jurisdiction in any action other than that for the purpose of which the arrestment was used, even though the new action was at the instance of the same party or in reference to the same matter— Andersen v. Harboe, December 12, 1871, 10 Macph. 217, 9 S.L.R. 155; Goodwin & Hogarth v. Purfield, December 8, 1871, 10 Macph. 214, 9 S.L.R. 151. The amendments here altered the ground of action— Bank of Scotland v. W. & G. Ferguson, November 24, 1898, 1 F. 96, 36 S.L.R. 89. The amendments allowed were incompetent as raising a different question between the parties from that intended by the summons— Gibson's Trustees v. Fraser, July 10, 1877, 4 R. 1001, 14 S.L.R. 631; Malcolm v. Campbell, December 9, 1891, 19 R. 278, 29 S.L.R. 235; Leny v. Magistrates of Dunfermline, March 20, 1894, 21 R. 749, 31 S.L.R. 617; Hannay v. Muir, December 16, 1898, 1 F. 306, 36 S.L.R. 228; Russell, Hope, & Company v. Pillans, December 7, 1895, 23 R. 256, 33 S.L.R, 242. The pencil jottings in the defenders' books were not writ of the character necessary to instruct loan— Wink v. Spiers, March 23, 1868, 6 Macph. 657, 5 S.L.R. 76.

Argued for the pursuers and respondents—The effect of an arrestment jurisdiction is fundandœ causa, once used, was to establish a permanent jurisdiction over the defender until decree in the action— Cameron v. Chapman ( supra). The punctum tempor is to be looked to in considering whether a foreign defender had been made subject to the jurisdiction of the Court was the commencement of the action— North v. Stewart, July 14, 1890, 17 R. (H.L.) 60, per Lord Watson, at p. 63, 28 S.L.R. 397; Carlberg, &c. v. Borjesson, November 21, 1877, 5 R. 188, per Lord President Inglis, at p. 192, 15 S.L.R. 112. The fact that amendments were made in the course of the action was of no moment, provided the amendments were competently made. The question of the validity of the arrestment to found jurisdiction turned wholly on the competency of the amendments. The amendments allowed were competent, under the Court of Session Act 1868, section 29— Rose v. Johnston, February 2, 1878, 5 R. 600, 15 S.L.R. 325; Keith v. Outram & Company, June 27, 1877, 4 R. 958, 14 S.L.R. 591; Rottenburg v. Duncan, October 23, 1896, 24 R. 35, 34 S.L.R. 35. The action was essentially an action for money due and the bill of exchange was merely evidence in support of the claim for debt— Duncan's Trustees v. Shand, July 19, 1872, 10 Macph. 984, 9 S.L.R. 651—and in these circumstances the summons might be competently amended under section 29 of the 1868 Act as well as the condescendence— Shotts Iron Company v. Turnbull, Salvesen, & Company, January 11, 1870, 8 Macph. 383, 7 S.L.R. 228. The cheque proved that the money passed and the pencil jottings in the books of the defendant company, taken with the cheque, were sufficient writ to instruct the loan.