Scottish Court of Session Decisions

Within sixty days of these arrestments, Broadfoot's estates were sequestrated. In January, 1834, during the dependence of the action, but after the sequestration, his law-agent wrote to Hepburn and Company, intimating that he held them personally liable for freight, independently altogether of the arrestments, which, although they related to the liability of Broadfoot for the same debt, were not meant to imply any discharge of the liability of Hepburn and Company. After obtaining decree for £174 of freight against Broadfoot's trustee, Kirk raised a multiplepoinding in the name of Hepburn and Company, and claimed payment out of the fund in medio, which consisted of freight earned by Kirk upon the cargo delivered to Hepburn and Company, conform to bill of lading in their favour. The amount still due by Hepburn and Company being £217, exceeded the balance due to Kirk; he, therefore, argued that he was entitled to be preferred, as it was directly due to him, in name of freight, by Hepburn and Company, the consignees of the cargo, and he had never discharged their liability. The letters of Broadfoot amounted to an admission that the sum was due to him by Hepburn and Company. And the use of the arrestments could not affect the liability of Hepburn and Company, as they merely implied that Broadfoot was also liable, and had funds in their hands, and intimation to that effect was made to them. Even though the arrestments were struck at by the supervening sequestration of Broadfoot, that could not prevent Kirk from recovering a debt which was directly due to himself by Hepburn and Company.

Broadfoot having recovered possession of his estate, under a composition-contract, claimed in the multiplepoinding, and maintained that Kirk was only a common creditor of his under the charter-party with him, and must rank for the composition on the balance due to him. He was not connected with the sub-charter-party, and he could take no benefit by it. Accordingly, Kirk had acted upon that footing by raising an action against Broadfoot, and using arrestments in the hands of Hepburn and Company, which was inconsistent with these parties being his debtors, and necessarily implied that Broadfoot alone was looked to.

The Lord Ordinary ^* “sustained the claim of Robert Kirk, ranked

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^* “ Note.—The claimant, Kirk, master and owner of the ship Diligence, chartered her to the other claimant, Broadfoot, for a voyage to Quebec and Montreal, and home to Newburgh, in the Tay, at a gross freight of £500. By another charter-party, dated a few days afterwards, entered into between Broadfoot and Hepburn and Company, the latter took the vessel to freight from Broadfoot for the voyage home, binding themselves to load her with timber (which was also the return cargo contemplated by the original charter-party), and to pay freight to Broadfoot at certain rates. It does not appear on the record whether Kirk, the owner, was cognizant of this second contract between Hepburn and Company or not. On the arrival of the vessel at Montreal, Kirk, who had then got certain instalments of the freight, in terms of the original charter-party, received a cargo of timber from Le Mesurier, Tilston, and Company, merchants in Quebec. Those persons are, in the instructions from Broadfoot to Kirk, described as the agents of Broadfoot, the original freighter, and it is said by Kirk that they were also the agents of Hepburn and Company, the sub-freighters. The bill of lading granted by Kirk on getting the timber on board is granted directly to Hepburn and Company. On the arrival of the vessel at Newburgh, the cargo was delivered to Hepburn and Company, who, agreeably to instructions from Broadfoot, paid to Kirk the sum of £100 to account. Shortly afterwards, by letter of the 14th November, 1833, Broadfoot intimated to Hepburn and Company his wish that they ‘should delay settling for the balance until I see what quantity he (Kirk) delivers, and what money he received in Quebec, of which I have yet got no account.’ Kirk, then, under the impression, as he states, that Broadfoot meant to dispute the amount of the balance of freight due, brought an action against him for that balance, and used arrestments in the hands of Hepburn and Company, intimating at the same time that it was done ‘to guard them against payment of the balance to Broadfoot without prejudice to their personal liability to himself for that balance, in terms of the bill of lading, and relative charter party.’

“Upon the summons being raised, Broadfoot wrote to Kirk's agent, expressing his surprise, and concluding, ‘I merely wrote Messrs Hepburn of Perth to delay settling with him, until the correct balance he had to receive was ascertained; and, to satisfy you on this point, I annex a copy of my letter to those gentlemen on the subject. I presume the freight of the return cargo will amount to considerably more than Captain Kirk has to receive; I consequently wished them to grant him a bill for no more than the balance I was due him, and this they shall be instructed to do whenever that balance is ascertained.’ The action proceeded, and Kirk ultimately obtained decree against Broadfoot for the sum of £174, as the balance due to him under the original charter-party; which sum, it must be kept in view, is considerably less than the amount remaining due by Hepburn and Company under the sub-charter-party and bill of lading. Hepburn and Company raised a multiplepoinding, in which the balance of freight due by them formed the fund in medio, and the only competitors now are, Kirk, the master and owner of the vessel, and Broadfoot, who, having been sequestrated, and discharged on a composition-contract, claims the fund in medio as in right of his creditors, and maintains that Kirk has no right of preference on the freight due by the raisers, and has only a claim, like any other personal creditor, against him, Broadfoot, for the composition due on the balance of freight under the original charter-party. As the arrestment used by Kirk was deprived of effect by Broadfoot's sequestration, the question turns entirely on the right held by Kirk, as the owner of the ship, to the freight due by Hepburn and Company, the sub-freighters, in competition with Broadfoot, or rather with Broadfoot's creditors.

“The Lord Ordinary is of opinion that Kirk is entitled to a preference. There is here, it will be observed, no question involving the interest of Hepburn and Company; a question which might have been attended with considerable difficulty, if, for instance, Kirk, the owner and master, had been cognizant of the sub-contract, and had waved his right of lien by delivery of the cargo, and if Hepburn and Company had bona fide paid the whole freight due under their sub-contract to Broadfoot. Here it is admitted that the balance of sub-freight still due by Hepburn and Company is more than sufficient to pay that due under the original contract to Kirk. And it appears to the Lord Ordinary that to the amount of the latter balance Kirk's claim must be sustained. It is true that Hepburn and Company were not directly bound to him by charter-party, but by the ordinary principles of mercantile law, they were, by taking delivery of the goods, bound to him under the bill of lading for freight; which, in a case like the present, would probably be limited to the freight stipulated by them in their sub-contract with Broadfoot, the original freighter. The Lord Ordinary thinks that this would have enabled Kirk to raise action directly against Hepburn and Company for the amount, and a fortiori must it sustain his claim of preference in a question with the creditors of the party, or, as it happens here, the party himself, by whom under the original charter-party freight was due. There seems to be a most exact analogy between this case and that of a landlord claiming in the hands of a sub-tacksman sub-rents yet unpaid, in a competition with the creditors of the principal tacksman, in which circumstances the landlord's right of preference is unquestionable; and in confirmation of this it is to be observed that from the correspondence, and particularly from the letter last quoted from Broadfoot to Kirk's agent, Broadfoot himself seems expressly to have recognised Kirk's interest in the balance of sub-freight due by Hepburn and Company to the extent of the balance due by him, Broadfoot, to Kirk, as soon as the latter balance should be ascertained.”