Scottish Court of Session Decisions

This was an action of reduction brought by the trustee on the sequestrated estate of John Cunningham Orr, some time proprietor of the Fife Herald, against Robert Tullis, residing in Mark inch, formerly residing in Cupar, and the object was to set aside certain deeds whereby the copyright, plant, &c., of the Herald were transferred to Mr Tullis by Mr Orr in the year 1863, or, at all events, to obtain declarator that the subjects in question had never been validly transferred to Mr Tullis, and fell under the sequestration of Mr Orr. It appeared that Mr Orr was proprietor of the newspaper in question, and held the copyright, and himself printed and published the paper, carrying on his business in premises rented from the defender. In 1863 he got into embarrassments, and entered into an arrangement with the defender, whereby he sold to the latter, subject to certain powers of redemption, the copyright and whole printing plant on the premises, and agreed to renounce his lease of the premises, and take a new lease of the premises, copyright, and plant. Orr continued in possession under this arrangement till 1869, when he became bankrupt, and his trustee then brought the present action, in which he pleaded, in the first place, that the transaction was simulate, and not a bona fide sale; and, in the second place, that, at all events, the defender had never obtained possession so as to vest him with the property either of the copyright or plant.

The Lord Ordinary (GIFFORD), on advising a proof, pronounced the following interlocutor:— “The Lord Ordinary, having considered the closed record and proof adduced by the parties, and having heard parties’ procurators, assoilzies the defender from the reductive conclusion of the libel, and also from the first declaratory conclusion, being the first alternative conclusion of the libel; Finds that the copyright, proprietorship, or right of publication of the newspaper called The Fife Herald, Kinross, Strathearn, and Clackmannan Advertiser, was effectually transferred to and vested in the defender prior to 29th March 1869, being the date of the sequestration of the estates of John Cunningham Orr, and that the same was not attached by the said sequestration; but finds that the various moveable articles and effects specified and contained in the inventory annexed to the conveyance, dated 21st October 1863, No. 7 of process, not having been delivered to or taken possession of by the defender prior to the said sequestration, the property thereof still remained vested in the person of the said John Cunningham Orr, and that the said articles were effectually attached by the said sequestration, and were carried to the pursuer, as trustee in the sequestration, for behoof of the creditors of the said John Cunningham Orr; and finds and declares that the said moveable articles specified in the said inventory are the property of the pursuer, as trustee foresaid, and that he is entitled to obtain possession of the same, and to dispose thereof for behoof of the creditors: Quoad ultra assoilzies the defender from the whole other declaratory conclusions of the summons, and decerns: Reserves meantime all questions of expenses, and appoints the cause to be enrolled with a view to the disposal of the remaining conclusions of the action.

“ Note.—Under the interlocutor pronounced by Lord Barcaple, dated 24th November 1869, a very long and elaborate proof has been led. Indeed

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the Lord Ordinary cannot help repeating what he said at the time, that the proof appeared to him to be needlessly protracted and detailed. In the Lord Ordinary's view there can be no reasonable doubt as to the facts of the case; but the questions of law thence arising are delicate, difficult, and important.

“I. The Lord Ordinary is of opinion that the pursuer has entirely failed to substantiate his averments of fraud, or any of them, and that he has failed to make good any grounds for reducing or setting aside the minute of agreement, the conveyance, and the lease, all dated 21st October 18C3, or the supplementary agreement of 9th August 1867, or any of these writs. The Lord Ordinary has accordingly assoilzied the defender from the reductive conclusion of the summons.

“It is needless to examine the evidence in detail. The Lord Ordinary believes, in all its particulars, the testimony given by the defender, by Mr Arthur Russell, banker, Cupar, and by Mr John M. Douglas, writer, Cupar, the agent by whom the deeds were prepared. The material parts of the evidence of these witnesses are really uncontradicted by any one, excepting by Mr Orr, the bankrupt, for the Lord Ordinary can attach no weight to the evidence of H. R. Mackenzie. Even Mr Orr, the bankrupt, himself admitted that at the time the transaction was gone into, in 1863, he considered himself quite solvent, although much pressed for want of money to carry on his business.

“The case of fraud attempted to be made out by the pursuer rests upon Mr Orr's insolvency in 1863, and upon that insolvency being known to all the parties. But it is not proved that de facto Mr Orr was insolvent in 1863, and it is abundantly established that, whether insolvent or not, the contracting parties believed him to be solvent, and went into the transaction on that footing. Indeed, the admitted fact that the pursuer on the faith of the transaction paid away£955 is the strongest possible real evidence, not only of his entire bona fides, but of his belief, and that of his advisers, that Orr, who received the money, was not in insolvent circumstances.

“The transaction was not in any sense a scheme to obtain a preference for the then existing creditors of Mr Orr, and the Lord Ordinary has failed to find the slightest evidence implicating the defender either in legal or in moral fraud. He may have been imprudent or ill advised in laying out money on such an investment; but he certainly did not lay it out fraudulently, or in order to bring about any fraudulent purpose.

“II. The Lord Ordinary is further of opinion that the pursuer has entirely failed to establish that the deeds, which on their face embody one species of transaction, were really meant to carry out a different species of transaction, inconsistent with their terms.

“The element of fraud necessarily enters into this part of the case also, for, excepting in a case of fraud, much of the evidence relied on by the pursuer is utterly inadmissible.

“If, then, as the Lord Ordinary thinks, no fraud has been established, it requires a very short step further to find that the deeds themselves must be read and held to import the transaction which they expressly bear and set forth; and that they cannot be contradicted or explained away by parole evidence, by the alleged understandings of one of the parties or by loose expressions occurring in the correspondence of the agents or of third parties.

“The pursuer's contention is, that although the deeds expressed an out-and-out sale, with a lease, and with certain stipulations authorising the redemption of the subjects sold, they were really intended to embody an agreement of loan, with an assignation in security thereof; and then the pursuer proceeds to challenge the validity of such a security.

“The Lord Ordinary sees no ground for reading the deeds otherwise or in any different way from that in which they are expressed. The legal effect of the deeds is a totally different question; but in order to determine the legal effect the deeds must be read as they stand, and the Lord Ordinary thinks it quite impossible to hold them as importing a transaction of loan, which they expressly repudiate.

“It seems quite clear that there was no loan. There was no obligation to repay. No action for payment would have lain against Mr Orr; and had the subjects perished, they would have perished, not to Mr Orr, but to the defender.

“It is true that in some respects a sale with a clause of redemption resembles a loan or security, but the legal effects and the legal character of the two contracts are totally different.

“The parole evidence leaves no doubt as to the real history of the case. A loan was originally proposed, and the defender was willing to have granted a loan if he could have been made legally secure. But he was advised by Mr Douglas that he could not get a legal security for a loan, and that his money would not be safe unless he made an out-and-out purchase of the copyright and plant. The idea of loan was then definitely abandoned, and throughout the whole subsequent negotiations everybody, including Orr himself, knew that what was to be gone into was not a loan, but a sale. It is impossible to allow’ Mr Orr to repudiate the deeds not only executed by him, but engrossed in his own hand, and to contradict the language of these deeds, language which is almost suspicious because of its very explicitness. It is not unworthy of notice that Mr Orr has received a legal education, and he must have understood perfectly the nature of the deeds which he extended and executed. He sought and he obtained no back-bond of any kind, and no letter of declaration explaining or controlling the deeds. And it is incompetent to attempt to explain or control them by parole proof.

“The expressions occurring in Mr Douglas’ letter, when the letters are read as a whole, are in no way inconsistent with the transaction being precisely that which the deeds bear. When Mr Douglas uses the expression ‘security,’ he plainly does not mean a pledge or security for a loan, for he had expressly refused to allow his client to give a loan. The word is used as a short mode of expressing the defender's legal rights in reference to the investment. In common language deeds and securities are spoken of without any necessary reference to loans or mortgages. But even were it otherwise, Mr Douglas’ letters could not destroy the defender's rights.

“Nor is the Lord Ordinary at all moved by the correspondence of Mr Morrison, or by the parole evidence relative to the registration of the Fife Herald under the Newspaper Act, 6 and 7 William IV., c. 76. When rightly understood, it seems clear that the proposal to get Mr Tullis registered as a bond-holder necessarily involved a change on the existing transaction, and the execution of new

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deeds; and this was quite in the view of the parties. No such change, however, was ever effected; and the defender was registered, not as a bond-holder, but as the proprietor of the newspaper, which upon the face of the deeds lie certainly was. Further, the proposal about registering the defender as a bond-holder did not come from the defender himself, but from his uncle, and there is no evidence that the defender either authorised or was cognisant of the terms in which Mr Morrison wrote.

“On this part of the case the Lord Ordinary has no hesitation in holding that the deeds must be read and must receive effect exactly as they stand. He thinks it impossible to declare that they mean anything different from or anything inconsistent with their precise terms. He has, therefore, assoilzied the defender from the first alternative or first declaratory conclusion. Here the Lord Ordidinary thinks it right to note, that as great part of the proof, probably more than three-fourths, relates to the two first conclusions, if the Lord Ordinary is right in assoilzieing the defender therefrom, the defender will be entitled to a large part of the expense of the proof in whatever way the ulterior questions of law may be disposed of.

“III. In dealing with the legal effect of the deeds, and with the rights which the defender has acquired under them, the Lord Ordinary will first consider the ‘copyright,’ as it is called, of the Fife Herald —that is, the proprietorship of or right to publish that newspaper.

“The Lord Ordinary is of opinion that the pro-prietorship of or right to publish the Fife Herald was effectually conveyed to and completely transferred to and vested in the defender prior to the date of Mr Orr's sequestration. He thinks that the defender did everything that was necessary to complete the transfer. There is very little authority on this point, but the view which the Lord Ordinary takes is shortly the following:—

“The proprietorship of a newspaper is not, strictly speaking, a right of copyright. It is not a right to publish any specific literary composition or literary matter, and probably does not fall under the Copyright Acts. It is a right to continue a serial publication under a given name, every issue being necessarily a new composition or compilation, and the value of the right consisting in the circulation which the past management of the newspaper has secured, and in its popularity as an advertising medium. It is an incorporeal moveable right, which undoubtedly is patrimonial, capable of being transferred by assignation, or of being attached by diligence. And the question is, How is the transference of such a right completed ?

“It cannot be by tradition or delivery in the literal sense, for the right is intangible and incorporeal. It must, therefore, be by the exercise of the right, or by such public assertion thereof as the nature of the case admits.

“Now, it so happens that by public statute, 6 and 7 Will. IV., cap. 76, regulating duties on newspapers, it is enacted (section 6), that no person shall print or publish a newspaper until there has been delivered at the proper office a written and signed declaration containing a variety of particulars, and among other particulars the name of the proprietor or proprietors. And if the proprietors are resident within Great Britain, the declaration must be signed by them. By a subsequent section such declaration is declared conclusive evidence against the parties subscribing the same, and the register is open to the public, who may inspect it at all times without fee or reward.

“In the present case such a declaration was made and registered under date 9th August 1867. The declaration, which is signed both by Mr Orr and the defender, bears that the defender is the sole proprietor of the Fife Herald, and that Mr Orr was merely the printer and publisher thereof. The Lord Ordinary thinks that great weight must be attached to this official and public declaration. It fixed the legal rights and liabilities both of Mr Orr and of the defender. In the case of ex parte Baldwin and ex parte Foss, 15th March 1858, 2 De Gex and Jones, 280, 27 Law Journal, Bankruptcy, 7, the property of a newspaper was held not to have been transferred from a bankrupt because he had continued the sole registered proprietor under the statute. And Lord Justice Turner explains that although the statute may be primarily intended for fiscal purposes, the registry furnishes the means by which the ownership of the property may be known to the world, and thus the statutory declarations are indicia of the property which must be attended to for the purpose of taking the property out of the disposition of the bankrupt.’

“Still farther, the Lord Ordinary thinks that the right to publish was used by the defender. No doubt he exercised that right through Orr, who continued to be the printer and publisher. But Orr published by authority of the defender, and he paid the defender a large annual sum for liberty to do so, and this throughout a series of years.

“Nor was there anything done inconsistent with the defender's proprietorship. The imprint of the newspaper both before and after the transfer merely announced that Orr was printer and publisher, and did not state who was proprietor. And although, previous to the agreement of 1863, Orr used a business invoice or letter-heading mentioning that he was proprietor of the newspaper, this was discontinued whenever the agreement was signed, and the copperplate containing the heading was given up to the defender.

“In the whole circumstances, therefore, the Lord Ordinary thinks that the transfer of the right to publish the Fife Herald was sufficiently completed. Everything was done which the nature of the case fairly admitted. See Bell's Comm. vol. i, p. 176, where instances are given where in cases of necessity—such as sale of sheep, stock, &c., imperfect or symbolical acts of possession are held sufficient to complete the transfer.

“IV. The Lord Ordinary, however, has come to an opposite conclusion regarding the plant and printing materials assigned by the conveyance of 21st October 1863, and mentioned in the inventory relative thereto. These never having been delivered either actually or constructively prior to the sequestration, were, the Lord Ordinary thinks, not transferred to the defender, but remained subject to the diligence of Orr's creditors, and were attached by his sequestration.

“(1) The plant and materials in question were ordinary corporeal moveables, undoubtedly capable of actual delivery, and there was nothing in their character or position to make actual delivery impossible, or to introduce a necessity for constructive delivery.

“(2) They were in the natural possession of Orr at the time of the sale, used by him in his

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ordinary business, and apparently at his entire disposal. They continued in Mr Orr's custody till his sequestration in 1869, and during all these years, from 1868 to 1869, they were used and employed by him, in precisely the same way as they had been before the agreement of sale. In regard to these moveables the case is undoubtedly one of sale retenta possessions.

“(3) Not only so, but it was matter of precise agreement and stipulation that Mr Tullis, the purchaser, should not get possession except in certain events. All he was to get in the first instance (agreement, article 1st) being a conveyance in exchange for the price. By article 11th of the agreement it is provided, that in case Mr Orr become bankrupt, grant a trust-deed for creditors, or fail to publish the newspapers, then Mr Tullis ‘shall be entitled to take instant possession’ of' inter alia, the plant ‘contained in said inventory.’ Nothing can more clearly show that Mr Tullis was not to have possession sooner.

“(4) Now, at common law, sale retenta possessions does not pass the property, but leaves it exposed to the diligence of the seller's creditors.— See Bell's Comm. i, 167, 171, and 252. It is needless to quote cases, for the rule has received ample illustration, and the only difficulty is whether the present case does not fall under some of the exceptions which the exigencies of trade have introduced. Reference may be made to the cases of Macarthur v. Brown, 9th July 1858, 20 D. 1232; Gibson v. Forbes, 9th July 1833, 11 S. 916; Matheson v. Allison, 23d December 1854, 17 D. 274; Anderson v. MlCall, 1st June 1866, 4 M. 765. The Lord Ordinary thinks that, in the present cases, there are no circumstances which could be held equivalent to delivery.

“(5) The payment of rent was much insisted on by the defender. But this was mere matter of contract between Orr and Tullis, and it would be very dangerous to hold that delivery is dispensed with in a sale whenever there is an agreement either by the purchaser to pay store rent, or by the seller to pay hire for the continued use of the subject sold. None of the cases support this doctrine.

“(6) Nor is the defender's case strengthened by the fact that the payment of the rent under the lease was on several occasions judicially enforced. This might make the transaction more or less known, but what is wanted is not publication but actual or constructive delivery. A public advertisement might make a contract of sale quite notorious, but that would not dispense with the necessity of tradition.

“(7) Stress was laid on the circumstances, fully detailed in the evidence, that the initials of the purchaser were painted on the principal articles of the plant, and that thereafter a small printed label, bearing ‘ Robert Tullis, owner,’ was pasted upon the presses, cases, and boxes containing types, &c. It was ingeniously urged that this was equivalent to marking growing trees which are sold, or branding cattle which are to be left in the seller's parks.—See 1 Bell's Comm. 176. The case of Eadie v. Young, 15th June 1815, Hume's Decisions, 705, which in some respects is similar to the present, was strongly founded on. The Lord Ordinary, however, has not been able to hold the painting or labelling as equivalents to possession. There is an obvious difference between labelling the plant in a printing-office and affixing a name-plate to carts at the usual place where the owner's name is affixed. This was the species facti in Eadie's case, and this, coupled with payment of hire, was held equivalent to delivery. There was, however, great difference of opinion, and to extend the principle to the present case would really be to introduce a new mode of taking delivery of moveables.

“(8) And, lastly, in the Lord Ordinary's opinion, the Mercantile Amendment Act does not apply to the present case, or entitle the defender to demand delivery after the sequestration. This seems sufficiently established by the case of Sim v. Grant, 3d June 1862; 24 D. 1033. In that case the continued possession and use of the subject by the seller was held to exclude the purchaser's right, and to admit the diligence of the seller's creditors. It does not appear that it would have made any difference if the seller had agreed to pay, and had actually paid, a hire for the use. See also the case of Wyper v. Harvey, 27th February 1861, 23 D. 606, which contains valuable observations on the Mercantile Amendment Act. Reference may also be made, as illustrating the present case by contrast, to Union Bank v. Mackenzie, 27th March 1865, 3 M. 765. The decision in that case would have been different if the tenant who possessed the moveable machinery had been previously in pos-session, and had sold it to the bank.

“The judgment which the Lord Ordinary has pronounced does not affect the defender's right to the Main's printing machine and to the fixtures. The trustee has only been found entitled to the moveables sold by the conveyence of 21st October 1863, but not delivered before sequestration.

“v. The Lord Ordinary thinks that the present case does not fall to be decided on the doctrine of reputed ownership. A good deal of evidence was led by the pursuer as to Mr Orr being the reputed owner both of the ‘copyright’ and of the plant. In the Lord Ordinary's view, almost the whole of this evidence is irrelevant and inapplicable to the circumstances of the present case.

“(1) As to the so-called ‘ copyright ’ or right of publication: This being an incorporeal right, it is more than doubtful whether mere repute of ownership, if unaccompanied by any of the indicia of property of which the case is susceptible, would be of any importance. It seems plain that the mere guesses or suppositions of persons who had no means of knowledge, and who never made any special inquiry, would never make Mr Orr proprietor, or admit the diligence of his creditors. A great deal of the evidence relied on by the pursuer is, in the Lord Ordinary's opinion, utterly worthless. If the Lord Ordinary is right in holding that the property of the newspaper was effectually transferred by the public registry of Mr Tullis as proprietor and otherwise, it would require something much stronger than exists in the present case to make it subject to the diligence of Mr Orr's creditors on the ground of reputed ownership.

“(2) As to the plant:—Here also, in the Lord Ordinary's view, the doctrine of reputed ownership is inapplicable. For if the property was never taken out of Mr Orr, then his creditors may attach it whether he was reputed owner or not. “Where there is real ownership there is no necessity for reputed ownership.

“In any view, however, the Lord Ordinary thinks that the reputed ownership of the plant de facto came to an end in 1667, when Mr Douglas, with his own hands, painted the initials of Mr Tullis on all the principal articles of the plant. It

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is clear from the evidence that this scene became publicly and widely known, and is even said to have destroyed Mr Orr's credit. Now, the Lord Ordinary has held that this painting and labelling did not pass the property; but if, contrary to the Lord Ordinary's opinion, it should be held that the property was passed, then it appears that the painting and labelling was sufficiently public to destroy the repute of ownership.

“As the proof led did not include questions of damages or accounting, and as there are petitory conclusions still to be disposed of, the Lord Ordinary has appointed the cause to be enrolled for further procedure, and he reserves in the meantime all questions of expenses.”

The defender reclaimed.

Shand and J. C. Smith for him.

Fraser and Rhind in answer.

At advising—