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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Wason v. Goudie [1868] ScotLR 6_468 (20 March 1868) URL: http://www.bailii.org/scot/cases/ScotCS/1868/06SLR0468.html Cite as: [1868] ScotLR 6_468, [1868] SLR 6_468 |
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Page: 468↓
Statements which held relevant to infer that by fraudulent appropriation of a debtor's goods a party had made himself liable for a debt due on a trade account.
In this case the pursuer sued the defender for a trade account of £24, 2s., being the price of goods furnished and delivered by the pursuer to Duncan M'Farlane, grocer in Calmonell. The pursuer made, inter alia, the following statements:—
“2. In or about the month of June 1864, the said Duncan M'Farlane, being in embarrrassed circumstances and considerably under the power of the defender, entered into certain arrangements with him, the precise nature of which is to the pursuer unknown, but, inter alia, to the effect that the defender should take possession of the whole stock-in-trade, shop-fittings, and effects belonging to, and pay the debts owing by him. The defender took possession of the said Duncan M'Farlane's stock, effects, and debts, and undertook and agreed to pay the debts due by the said Duncan M'Farlane, and, inter alia, the debt sued for. The paper, No. 26 of process, made out at the time by Mr MacLimont, Girvan, as the defender's agent, shows the state of M'Farlane's insolvency as then recognised by the defender.
3. In or about the month of June 1864, the said Duncan M'Farlane being then in insolvent circumstances, the defender collusively, illegally, wrongfully, and fraudulently, intromitted with, took possession of, and appropriated to his own use, the whole book debts and stock-in-trade, consisting of grocery goods, shop-fittings, and others belonging to the said Duncan M'Farlane, to the value of about £600, and thereby wrongfully and illegally deprived the pursuer of the means of duly recovering payment of the account sued for from the said Duncan M'Farlane. The entries on p. 202 of the defender's book, No. 29, show that he took back into his stock goods of M'Farlane's to the value of £53, 12s. 10d., and realized on other stock sold upwards of £50 further, besides disposing of another part of M'Farlane's stock for a sum of £75, 16s. 2d.”,
The Sheriff-Substitute (ROBISON) found the
Page: 469↓
action relevant, but the Sheriff (N. C. CAMPBELL) altered, and pronounced the following interlocutor:—“ Edinburgh, 22d September 1866. The Sheriff having heard parties' procurators upon the defender's appeal from the interlocutor of 81st July last, and considered the Closed Record, productions, and whole process, recalls the said interlocutor, and finds that the debt sued for is a trade account, which is alleged to have been incurred to the pursuer by Duncan Macfarlane, grocer in Calmonell: Finds that payment of this account is sought to be recovered from Mr Goudie, the defender, 1 st, in respect of a contract under which it is alleged that the defender had undertaken and agreed to pay the same; and 2 d, in respect of the defender having collusively, illegally, wrongfully, and fraudulently taken possession of the said Duncan Macfarlane's whole book debts and stock-in-trade while he was in a state of insolvency: Finds that the first of these grounds of action is supported by relevant averments, but in regard to the second of these grounds of action, finds that the statements on record are not relevant or sufficient to support the same, and remits the cause to the Sheriff-substitute to proceed therein as to him may seem just. “ Note—Duncan Macfarlane is the primary debtor in the amount of the account for which the action was raised. It was to him that the furnishings contained in the account were made.
Now there are two grounds upon which the pursuer seeks to make the defender Goudie answerable for the amount of this account. The first of them is, that Macfarlane, being in embarrassed circumstances, entered into certain arrangements with the defender to the effect that the defender should take possession of the whole stock-in-trade, shop-fittings, and effects belonging to Macfarlane, and pay all the debts owing by him; and, in particular, that the defender took possession of Macfarlane's effects, and agreed to pay the debt in question.
Now, if this statement be true, the defender Goudie did no wrong. He agreed, for an inadequate consideration, to pay the pursuer and Macfarlane's other creditors the whole amount of their debts, which Macfarlane was not able himself to pay. He, a solvent man, stepped into the shoes of an insolvent man, and undertook the insolvent's obligations; and the pursuer raises this action for the purpose, in the first place, of enforcing the contract made between Macfarlane and the defender on his behalf. So far the Sheriff is disposed to think that the pursuer's case is relevant.
But there is another ground on which he sues, which is thus expressed in the second plea in law, viz., ‘the defender having illegally, fraudulently, and collusively taken possession of the whole stock, debts, and effects of Macfarlane, the pursuer's debtor, while in insolvent circumstances, is bound either to restore such stock, debts, and effects, that the pursuer may suit action and diligence there—anent for recovery of his debt; or, failing such restoration, is liable in payment of the amount due to the pursuer, with interest and expenses.’ This second ground of action is not, in the opinion of the Sheriff, relevantly supported by the statements on record, 1 st, because the pursuer has distinctly averred, as already mentioned, a case of contract which seems to exclude fraud; 2 d, because, when fraud is founded on, very specific averments are required in regard to the nature of the fraud, and, because the pursuer has given no specification of any substantive act or acts that the defender did amounting to fraud; and 3 d, because there is no specification in any part of the summons or record of the book debts, stock, and effects which the pursuer asks the Sheriff to ordain the defender to restore, or place in the hands of the clerk of court.
How, it may be asked, can an effective decree be pronounced, ordaining book debts, stock, and effects generally, without any specification, to be restored or placed in the hands of the Sheriff-clerk? How, in particular, are book debts to be placed in his hands? And how is the Sheriff to ascertain whether all the book debts, and all the stock-in-trade and effects referred to, have actually been placed in his hands, when there is a total want of specification of the particular things to be placed there? Or, supposing nothing to be restored, how are the unspecified and unenumerated things to be valued, in order to the value being placed in the hands of the clerk of court? And if there be no means within the four corners of the record enabling the Sheriff to make an effectual decree for the restoration of any particular thing, it is clear that the Sheriff cannot grant the subordinate conclusion, viz., to ordain the defender to make payment of the sum sued for on the ground of the alleged fraud, for it is only in the event of a decree being pronounced for replacing Macfarlane's stock, &c., and that decree not being implemented, that payment of the debt on the ground of the fraud is sought.
The Sheriff has therefore held that there is no relevant case for replacement of Macfarlane's stock, or payment in lieu of replacement.
It will now be for the pursuer to say whether he means to go to proof on the alleged contract, or what he means to do.”
The case was afterwards advocated by the pursuer after judgment upon a proof. The question before the Court was the relevancy of article 3 of the pursuer's condescendence.
Maclean for advocator.
Paterson for respondent.
At advising—
The statements on which the advocator sought to have judgment were embodied in two articles of the condescendence-one affirming an agreement, the other alleging the illegal transmission. In cond. 2 the pursuer says—[ reads.]
The averment of an agreement is denied by the respondent in absolute terms.
Page: 470↓
The 3d article of the condescendence is as follows:— reads.]
The Sheriff-substitute held the averments in both articles relevant, and allowed a proof of both. The Sheriff differed as to the relevancy of the 3d, and disallowed any proof except in reference to the agreement stated in No. 2. A proof has been led, and judgment given as to the proof, but we are asked to consider whether the Sheriff did right in holding the statement in the 3d article irrelevant.
Had the 3d article stood alone, and the only demand preferred in the action been for payment of the pursuer's debt, as the legal inference from the facts alleged, I think that it scarcely admits of question that the case presented is relevant. What is represented is this, that one party takes possession of the entire stock and estate of an insolvent trader collusively and fraudulently, and appropriates it in its entirety to his own use, leaving nothing from which his creditors can operate payment of their debts. Surely such a transaction cannot be represented as legitimate. There is the element, in the first place, of insolvency; of an appropriation, in the next, of the entire property of the insolvent trader; and there is, further, the exclusion of any supposed innocent appropriation by the affirmation that the act of appropriation proceeded from collusion between the party taking and the party giving possession, and was fraudulent—that is, done with bad intention. I should be sorry to think that a transaction of such a nature could be upheld as illegal, or that it could be affirmed that creditors of insolvent debtors in Scotland should be deprived of their just rights by such a simple and easy arrangement.
That they must have a remedy against such an act seems plain, and the two remedies sought seem to me to present alternatives fairly calculated to meet the evil, unless the arm of the law is to be wholly paralysed in the vindication of the just rights of creditors.
The leading view of the Sheriff was, that the statement of the alleged contract to pay, contained in the 2d article of the condescendence, vitiated the statement in the 3d; and that, the statement being assumed as true, no wrong was done. He regarded the case as one presented in all its aspects as one in which it must be held as true that there was a special contract in the advocator's favour.
The case, as I regard it, was really presented in article 3 in an alternative view. The advocator, in his 2d condescendence, professes ignorance of the details of the arrangements entered into, but avers an agreement to pay his debt. The 3d article, as I understand it, proceeds upon the footing not that there was an agreement, but that there was not. The gravamen is, and the substantive averment to support the second medium concludendi was, that the respondent appropriated the estate, leaving the advocator in such a position that he could not recover his debt. Can I hold that the pursuer really meant to say, in libelling this 3d article of the condescendence, that the respondent was under personal obligation to pay the debt? It is a question as to what is really meant by the advocator, and it would be absurd, I think, to hold him as affirming in the same breath the existence of the contract and the gross fraud by which he was deprived of the power of recovering his debt by an appropriation of his debtor's estate. The reasonable and fair reading is,—there was a contract. I ask judgment on that footing; if there was no contract, there was such an irregular and illegal transaction as to warrant me to recover the debt or get a replacement of the property.
We do not in this country, any more than elsewhere, hold alternative pleading incompetent; and had the words ‘or otherwise’ preceded the 3d condescendence, I do not see how anything could have been urged against the relevancy. If the true meaning of the statement is to present an alternative view, shall we, on the narrow ground of an omission fully to express what was truly meant, withhold a remedy against what law considers a fraud?
As to the alleged necessity for further specification of the fraud, which is the second ground, I confess I see no palpable defect of statement. Insolvency,—appropriation of the insolvent's estate,—the necessary deprivation of a power on the part of his creditors to operate payment of their debts, and that done collusively and fraudulently,—seems sufficient.
As to the 3d reason, it applies to the alternative conclusion. It is not necessary to go into the question if, as I think, there is a case laid for the remedy of payment, but I can only say I do not share in the views of the Sheriff as to the extrication of the conclusion, or as to the necessity of a special condescendence in the outset of a case of a partner's share of effects taken by a fraudulent arrangement in wholesale from possession of an insolvent.
The other Judges concurred.
Agent for Advocator— Wm. Miller, S.S.C.
Agents for Respondent— M'Ewen & Carment, W.S.
