Scottish Court of Session Decisions

Action of damages for alleged slander at the instance of Torrance, merchant in Glasgow, against Leaf, Coles, Son, and Company, merchants in London, and James Turnbull, accountant in Glasgow, rested on the following statement of facts, as set forth in the summons and on the record. Torrance having become bankrupt, sequestration was awarded against him on the 6th December, 1831. A petition was, however, presented for recal of it on the 2d January, 1832; and, pending the discussion thereon, a second petition for sequestration was presented by other creditors on the 11th, but was not in the mean time insisted in. On the 28th January, the Court recalled the sequestration awarded on the 6th December, and thereupon Torrance made proposals for settling with his creditors by a composition, which was agreed to be accepted by a meeting of creditors, held on the 20th February. In the mean while, and before this meeting was held, the defenders, Leaf and Company, who were creditors of Torrance to a large amount, had been informed that an arrangement was proposed, and they on this, of date 16th February, wrote to the other defender, Turnbull, whom they had empowered to act as mandatory for them, the following letter:—

“ sir,—We are informed by your letter, dated the 10th instant, that the sequestration of William Torrance ii set aside by the Court in consequence of some informality in the proceedings of the law-agent. We regret that this circumstance has taken place, because unnecessary expense and delay must inevitably follow. We are given to understand that some arrangement is about to be proposed to wind up the concern without sequestration, but at present we are not favoured with the particulars. We consider the conduct of Torrance has been so exceedingly bad, that the creditors cannot with propriety come to any settlement short of sequestration. We think him a very proper person to be made an example of, and we do not see any other mode of punishing him than by making him a bankrupt, and keeping him without his certificate. From all that we heard of this transaction, we are of opinion that you have not been well used; and, in justice to your professional character, we feel ourselves called upon to state, that your proceedings in this affair of Torrance have our decided approbation; and, acting upon the general instructions we have always given you in matters of insolvency in Glasgow and the neighbourhood, we think that, on our account alone, you were perfectly justified in taking the prompt steps you did, for it is quite clear that, if Torance's system of selling his goods by auction had not been effectually stopped, a very small portion of the property would have been left for the creditors. We beg to assure you that our reliance on your integrity, skill, and activity, is the same now as it has ever been, and that no circumstance has occurred in the case of Torrance to diminish, in the slightest degree, the confidence we have placed in you, but, on the contrary, late events have confirmed it. We originally gave you our general instructions to act on our behalf to the best of your judgment in all cases of doubt, and we believe that your movements in the affair of Torrance's have been dictated solely by the consideration of what was best to be done, not only for our interest, but for the interest of the body of creditors, and we have yet to learn that you have erred, for we have seen nothing to lead us to that conclusion. For your farther satisfaction, we beg to inform you, that if another sequestration be awarded, and you wish to try again for the trusteeship, you shall have all the support we can give you; and you may depend, that, so long as you continue to act upon the fair and honourable principle that you have hitherto done, we shall always feel great pleasure in promoting your interest whenever it lies in our power. We are,” &c.

This letter, the pursuer averred, was by Turnbull, “under the direction of, or in concert with, the defenders, Leaf, Coles, Son, and Company—at all events, with their knowledge and approbation,” circulated among all the creditors of Torrance, a copy being appended to a circular from Turnbull, soliciting their support for the office of trustee, in the event of sequestration being again awarded, as contemplated by Leaf and Company. Thereafter, these parties were solicited by different creditors to concur in accepting the composition, but they declined; and, on the 27th March, they, and Turnbull as their mandatory, presented a petition, praying for sequestration. On the 28th, an application was transmitted to Leaf and Company by a considerable number of creditors, soliciting them not to proceed with the sequestration, but to accept the composition; and, at the same time, Henry Brooke and Son, also creditors of Torrance, had written them in these terms:—“We are creditors of W. Torrance of Glasgow as well as yourselves, and we regret to learn that you do not consent to his affairs being settled by composition, a way, we think, very desirable for the interest of all concerned; and we beg respectfully to urge this upon you, trusting you will give your support to the proposed plan.”

To this, Leaf and Company returned the following answer:—“ Gentlemen,—We are favoured with your letter, dated the 27th instant, and we are exceedingly sorry we cannot comply with your request of acceding to the proposed composition offered by William Torrance of Glasgow. In this, as in all cases of insolvency, we are guided entirely by the conduct of the party, and we presume you are not fully acquainted with the circumstances which occurred before the failure, or we think you would not willingly allow Torrance to escape punishment. In the month of October last, he came to London, for the purpose of purchasing goods. He bought nearly £500 of us, and also to a considerable extent of two or three other houses here; and, immediately on his arrival in Glasgow, he sent a large portion of these goods to the auction mart, and he disposed of them at any prices they would fetch. From an investigation of his affairs, it is pretty certain that, at the time he purchased these goods, he not only was well aware that he was insolvent, but that he never could pay for them. The system of selling goods by public auction appears to be gaining ground very much in Scotland, and we are determined, whenever we make a bad debt with a man who is guilty of such a practice, we will make an example of him, which can only be done effectually by making a bankrupt of him, and keeping him without his certificate. In pursuing this course with Torrance, we consider that we are only doing justice to ourselves, and protecting the interest of our numerous customers in Glasgow who mean to pay us twenty shillings in the pound. Looking at this case alone, we may perhaps lose a few pence in the pound; but we feel compelled to take a more extensive view, and to act upon a principle which will have the effect of deterring such characters as Torrance from coming to us, for we feel convinced it is only the ease with which these fraudulent insolvents get over their difficulties that increases the number of failures. We have taken out another sequestration, and have instructed our agent, Mr James Turnbull, to apply for the trusteeship, and we shall feel much obliged if you will give him your vote and interest. We have employed him upon many occasions, and we can with confidence say, that he will do the creditors justice, and make the most of the estate. We are,” &c.

Copies of this letter were, it was alleged, sent by Leaf and Company to Turnbull, and also to Mr Edward Railton, agent in Glasgow, who had been appointed one of a committee alongst with Turnbull, by the meeting of the 20th February, to obtain the concurrence of the absent creditors to the composition then offered.

Thereafter the second petition for sequestration, and that of Leaf and Company, were conjoined, and sequestration awarded on the 5th April, and ultimately a composition was accepted by the creditors, including Leaf and Company, of 9s. 6d., and Torrance discharged.

The letters above recited were alleged in the summons, and on the record, to have been not only falsely and calumniously, but also “maliciously” written and circulated, or caused to be circulated by the defenders, who on their part averred, in justification, the truth of the statements therein contained, and further pleaded that they were acting in bona fide in the exercise of their rights and privileges as creditors.

In preparing issues, Torrance maintained that he was not bound to take an issue whether the letters had been written and circulated “maliciously,” but only whether they had been written and circulated “falsely and calumniously,” and that it lay with the defenders, in order to bring themselves within a case of privilege, to take a counter issue whether they had acted in discharge of their duty, or exercise of their privilege as creditors. The defenders, on the other hand, contended, that on the face of the pursuers' own statement, a case of privilege was raised, and that he must therefore take an issue requiring him to prove malice.

The issues, as prepared by the clerk, put it only whether the letters had been written “falsely and calumniously,” with a counter issue on the part of the defenders, whether they had acted in the discharge of their duty, or exercise of their privilege as creditors; but on their coming before the Lord Ordinary for approval, his Lordship reported them to the Court, issuing at the same time the subjoined note. ^*

The Court, after hearing counsel, delayed to consider the point.