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SCOTTISH_Shaw_Court_of_Session

Page: 361↓

Henry

v.

Hepburn No. 111.

Court of Session

1st Division T.

Jan. 29 1835

Ld. Moncreiff, Lord President, Lord Balgray, Lord Gillies, Lord Mackenzie.

Robert Henry, Pursuer.— D. F. Hope— Cowan. Henry Hepburn and David Burns, Defenders.— A. Wood— Patton.

Subject_Arbitration—Assignation.—

Competent, pending a submission, for one of the parties to assign his claim, with power to the assignee to obtain decree in his own name; and, on the assignation being intimated to the opponent, and produced, for the arbiters to issue decree in the assignee's name.

Colonel Robert Henry of Woodend, employed David Burns, writer in Perth, as his law-agent, from 1816 to 1829. During that period there was no settlement of accounts between them, and as there were numerous cash transactions besides the law-agency, their accounts were complicated. On July 31, 1829, they entered into a submission of “all demands, claims, disputes and differences between them upon any account, occasion, or transaction whatever, to the amicable decision, final sentence, and decree-arbitral to be pronounced by John Miller, and Harry M'Leod, writers in Perth, arbiters mutually chosen by the said parties.” Power was given to the arbiters to take all manner of probation, and, inter alia, the oath of parties. It was declared, that “although either of the parties shall die before decreet-arbitral be pronounced in this submission, the same shall, nevertheless, continue in full force, and be, with the decreet or decreets arbitral to follow hereon, binding upon the heirs and representatives of the party deceasing; and the arbiters or oversmen are hereby empowered, notwithstanding any law or practice to the contrary, to proceed in and determine the matter submitted, as if no such death had happened.” The arbiters accepted the submission, and, after the discussion had proceeded a certain length by the production of claims and accounts, hine inde, Burns, on 1st February, 1830, executed, in favour of Bailie Henry Hepburn of Perth, an assignation, stating his claim in the submission to be for £2114, 9s. 5¾d.; and conveying “the said sum of £2114, 9s. 5¾d. sterling, as due by the said Colonel Robert Henry, and whole interest due or to become due thereon, all as contained in the said claim produced in said submission; with power to him to obtain decreet or decreets arbitral, interim or final, in his own name, or to sue forth and recover payment of such as may be obtained in my name, and in general my said whole debt, with all that has followed, or is competent to follow thereupon, with the whole grounds and instructions of the same; surrogating and substituting the said Henry Hepburn in my full right and place of the premises.” The assignation was intimated, on 5th February, to Henry, who indorsed it as intimated of that date. The pleadings in the submission proceeded in the name of Burns and Henry, as before, and in July and September 1330, and January, February, and April 1831, states of accounts were issued by the arbiters as to the details and the principles on which they proposed to adjust the accounting. On 13th May, notes were issued, explaining their opinion, and the terms in which they proposed to give forth the decree-arbitral. Before this, Bailie Hepburn lodged a minute in process “producing an assignation in his favour, dated the 1st, and intimated the 5th February, 1830, granted by the said David Burns, assigning him any sum or sums which may be found to be due to him in said submission, either by interim or final decreets arbitral, and authorizing decreet to go out for the same in his name; and he therefore craves that the honourable arbiters will issue decreet in his favour accordingly for the sums they have found to be due by the said Colonel Robert Henry to the said David Burns.”

After the opinion expressed on 13th May, the arbiters allowed Henry to put in a representation arguing the whole cause, and objecting to the competency of allowing Hepburn to be made a direct party to the contract of submission, or to have decree pronounced in his name. The arbiters refused the representation, and issued a decree arbitral, in which, after fixing the sums due, on the various branches of the case, hine inde, in distinct findings, as between Henry and Burns, and bringing out a balance of £529, 2s. 6d., as due to Burns, the decree thus proceeded:—“Eighth, The arbiters find that Mr Henry Hepburn has, in virtue of the assignation duly intimated, produced by him, right to the sum so found due to Mr David Burns, and is entitled to have decree in his name and favours for the same, subject always to the conditions after specified. Ninth, That Mr David Burns, and Mr Henry Hepburn, as coming in his room, must relieve Colonel Robert Henry of the effects of the following arrestments laid in his hands, or any claim against him on account thereof, viz. an arrestment of date 12th February 1830, by Isobel Blair, &c.” The decree thus concluded:—“we therefore decern and ordain the said Colonel Robert Henry to make payment to the said Henry Hepburn, as assignee foresaid, of the said sum of £529, 2s. 6d. sterling, with legal interest from and after this date till the same is paid; and upon the said submission and decreet-arbitral being recorded at the mutual expense of the parties, and upon the said Colonel Henry implementing this decreet, by payment making to the said Henry Hepburn of the foresaid sum of £529, 2s. 6d., for which the said Henry Hepburn, with concurrence of the said David Burns, shall grant a valid discharge at their expense, the said parties to the submission shall be held as mutually freed and discharged of all claims at the instance of either of them against the other prior to the date of these presents.”

Colonel Henry raised a reduction of this decree, in which he insisted in various grounds involving specialities; but, ultimately, the chief point on which he rested was the incompetency of introducing an assignee as a direct party to the contract of submission, and giving decree in his name, in place of his cedent, the party-submitter.

Pleaded by Colonel Henry—

1. In a submission, there is a delectus persons between all the parties to the contract; and, more especially, there is a delectus personæ in regard to the party with whom any one would consent to enter into a contract. Such a contract frequently relates to the adjustment of important interests, and many compulsitors, which are provided in courts of law for dealing with unfair and dishonest litigants, though not required as to men of a different character, are surrendered. But if the power of executing an assignation, to the effect of introducing the assignee as a party to the submission, be sanctioned, an opponent may be introduced, with whom, in all probability, the other party would not have entered into a submission. Accordingly, the contract is viewed as implying so strong a delectus personæ, that it requires a special clause to make it binding against the heir of either party. ¹ There might also be objections, more or less latent, on account of intimacy or connexion between the assignee and the arbiter, or on other grounds, any one of which, though not amounting to legal disqualification on the head of interest, relationship, &c, would effectually have prevented a party from entering into a submission with such person as the opponent. The contract of submission is, therefore, really changed upon a submitter, if he may be exposed to go on with an assignee of his opponent. He ought to have the same absolute right to refuse to go on with an assignee, which he certainly had at first to refuse to enter into the submission. ² If one assignation can be made, there is no limit to the number of successive assignees. Besides, in every such ease, the arbiters, of necessity, must determine on the legal validity of the assignation, before giving decree for the assignee. This might frequently give rise to nice discussions of legal questions, not one of which fell under the submission, and during the whole of which the submission would be kept open. The assignation might also operate injuriously upon an opponent's pleas of compensation, or retention, as in a question with the cedent. Farther, there is a delectus personæ on the part of the arbiters towards the submitters. An arbiter might decline to accept a submission with one set of parties, who would not decline to do so with another; and he might equally decline to go with any other than the original party. But, if so, a party is not to be exposed to the hazard of the submission being evacuated, in consequence of an assignation by the opposite party, in favour of a person with whom the arbiters might decline to proceed.

2. The pursuer is not barred by any personal exception, though he stated no objection to the assignation when intimated to him on 5th February, 1830. He could not prevent Burns from assigning any right which was vested in him; and it was in good time to object, as the pursuer had done, so soon as it was proposed to introduce Hepburn into the submission, and give decree in his name.

_________________ Footnote _________________

¹ Lady Elizabeth Maitland, May 18, 1796 (64l).

² Ersk. 3, 29 and 32.

Pleaded by Hepburn—

1. In this case, there is no possible injury which can be sustained by Henry through the assignation; because, throughout the whole discussion, Burns remained the only party pleading in the submission, until the arbiters had announced their final views, which were afterwards embodied in the decree arbitral. This case is, therefore, in so far special, that the assignee was merely recognised by the arbiters as a party at the close of the proceedings, to the effect of giving decree in his name, in place of his cedents. But even if there could be a delectus persons in respect of the litigious temper of an opponent throughout a discussion, there could be none as to the name of the person in whose favour a decree should be pronounced, because the assignee could merely take the right as it stood in the cedent, and the only change from inserting his name directly in the decree was, that it saved the expense of assigning the decree to him which would have been required, if it had been pronounced in the cedent's name. But, in truth, there is no such delectus personæ as to prevent an assignation, at any stage of the discussion. The original party is not thereby liberated, but remains bound; accordingly, it is well established, that, if one of the parties become bankrupt, the trustee on his sequestrated estate is entitled to be received as a party to the submission. ¹ A fortiori, a voluntary assignee, should be so received. It is from having been viewed as of the nature of a mandate, ² falling by the death of the granter, that the practice was introduced of stipulating that the submission should be binding, after the death of a party, or his heir. This does not apply to the case of an assignation during the life of the cedent. As he can undoubtedly assign his claim, provided the assignee does not make himself a party to the proceedings, an opponent is thus exposed to every risk which could arise from the assignee's connexion with, or relationship to, the arbiters. The only difference, by making the assignee a direct party, is, that if any legal objection existed to the arbiters' deciding in the cause where such assignee was concerned, it could be availably stated and enforced by the opponent. If any abuse arose from attempting a series of successive assignations of a claim, it could be disposed of when it occurred. But the objection is merely hypothetical, with reference to the present case, where there is but one assignation, and its validity, as a mere assignation, is not objected to, but only the right of the assignee to become a party to the submission. As the arbiters had not raised any question by attempting to decline to carry on the submission with the assignee as a party to it, it is unnecessary to argue the additional hypothetical case put by the pursuer. But if

_________________ Footnote _________________

¹ Barbour, Nov. 21, 1811, F. C.; Grant, June 23, 1820, F. C.; Anderson, May 25, 1821 (ante I. 28, or p. 31. New Ed.)

² 4 Ersk., 3, 29.

they had made objection, it would have been ill founded, as sufficiently appeared from the practice of sisting the trustee on a sequestrated estate.

2. But Henry was barred from objecting. The assignation was intimated on 5th February, 1830, and expressly gave power to the assignee to obtain decree in his own name. No objection was taken for above a year, during which much discussion took place; and, after this acquiescence, it was too late to object, when an unfavourable decree was about to be pronounced.

The Lord Ordinary “appointed the parties to prepare and lodge cases on the cause as it now stands, in order that it may be reported to the Court.” ^*

Lord President.—If the effect of an assignation was to liberate the cedent from the contract of submission, and to substitute the assignee alone in his place, the question would be very different from that which is presented for our decision. But as the cedent remains effectually bound, notwithstanding the assignation, I

_________________ Footnote _________________

^* “ Note.—The principal question which arises in this case, appears to the Lord Ordinary to be in a great measure new, and of considerable importance. The question is, whether, where a submission has been entered into between two parties for the decision of all questions, claims, and disputes at that time existing between them, it is competent for one of the parties, by a special assignation, to convey his contingent claim under the submission to a third party, to the effect of enabling that third party to make appearance, and become directly the party in the arbitration, and whether it is competent for the arbiters to give decree to that assignee nominatim, notwithstanding an objection by the other party to the competency of the proceeding. The Lord Ordinary has difficulty in thinking that such a decree is competent: for a submission being merely a contract, and the motives and good faith on which it may be entered into very often depending on the knowledge of the character of the person who is the other party to it, it seems to be difficult to say that either of the parties can by his voluntary act change the nature of it, so as to compel his opponent to proceed in such a transaction with a third party with whom he never agreed to enter into any arbitration. I may be willing to enter into an arbitration with a friend or neighbour for the settlement of accounts between us, or even to submit a disputed matter with a person, whom, though I have differed with him, I know to be a man of honour and fairness, rather than go into a court of law, and yet if I had expected to have for my opponent perhaps the most notorious and troublesome litigant in the courts of the country, I would not have entered into any such contract. With a view, therefore, to the bona fides of arbitration, it seems to be an important question, whether such a change in an essential point of the transaction can be forced upon a man against his will.

“Cases of bankruptcy have occurred. But though such cases are not free from doubt, in principle they do not reach the present case; for in such cases there is no voluntary assignation of the particular claim in the arbitration. The immediate interest in it merely passes by the act of the law with the other estate of the bankrupt, and the bankrupt himself continues to have a direct interest. The trustee is merely sisted to enable him to go on. But if it be essential, in order to make a submission binding with the heir of the party, that this should be expressly provided, it is difficult to see how, without any such clause, it should be made to pass in the much stronger case of an assignee.”

cannot see any ground for holding him disabled from executing the assignation, or the assignee from obtaining decree in his own name.

Lord Balgray.—I think the assignation is competent. There are many similar cases in which parties agree to submit questions, and where it is evident that there is a power to assign, and to make the assignee a party to such submission. In a sale by public roup, for instance, it is often inserted in the articles of roup that disputes shall be settled by reference to a party therein named. But if a man purchases a lot at such roup, and afterwards, by private bargain, sells his lot cum omni causa to a third party, certainly his disponee not only acquires the right of enforcing the article relative to submission to the arbiter, if a dispute arises; but he also comes under the obligation to be a party to such submission if called on. I think a judicial assignee of this claim could hare appeared in the submission and enforced the claim, and I can see no good ground for holding that the voluntary assignee could not do so.

Lord Gillies.—I think the decree arbitral is good and valid. I have often heard of a delectus personæ in the choice of a co-partner, or of a tenant; but I do not understand such delectus to exist in the choice of an antagonist.

Lord Mackenzie.—I think the reasons of reduction ill-founded. It is past all question that the party to a submission can assign his whole claim and interest in it to a third party pending the submission. The only question is, whether the assignee can be introduced into the submission as a direct party to it. This is quite established in the case of a trustee on the sequestrated estate of either of the parties, and I am a loss to see why the same right should not belong to a voluntary assignee. I can conceive that the admission of a trustee might, in some views, be more prejudicial to the opposite party than the admission of a voluntary assignee; but I cannot see any ground for holding the converse of this. Indeed it does not occur to me that there is even the possibility of injustice in allowing decree to go out in the assignee's name, in place of the cedent's. It is a mere formal objection that is taken to the validity of the decree, and I think it is unfounded.

The Court assoilzied from the reduction, and subjected the pursuer in expenses.

Solicitors: W. and J. B. Douglas, W. S.— G. Ritchie, W.S.—Agents.

SS 13 SS 361 1835