Scottish Court of Session Decisions

On 29th August 1878 Carruthers & Company, iron merchants, Newcastle-on-Tyne, consigned to themselves at Greenock 6 tons 11 cwt. of old waggon axles, in terms of the following memorandum to the agent of the Caledonian Railway at Greenock—“1 truck N.E. 3054 old waggon axles from Tyne Dock, N.E., to our order at Greenock. Please deliver to Messrs Banks & Stewart, of 30 Hope Street, Glasgow, or their order.”

On the 3d September Banks & Stewart, Glasgow, sent the following post-card to the railway company—“On arrival of axles from Carruthers and Co., Newcastle-on-Tyne, to our order, please forward to Messrs John Harrison & Co., iron merchants, Greenock.” The railway company accordingly delivered the axles to Harrison & Co., but without receiving the delivery-order.

Banks & Stewart shortly afterwards suspended payment, and the railway company having been obliged to pay to Carruthers & Co. the price of the axles which they had wrongly delivered to Harrison & Co., raised this action in the Sheriff Court of Renfrewshire at Greenock against Harrison & Co., for re-delivery of the axles, or alternatively for the sum of £37, 0s. 2d., being their price, together with the cost of carriage to Greenock.

The defenders pleaded—“(1) No title to sue. (2) No privity of contract between the pursuers and defenders. (3) The pursuers' statements are irrelevant and insufficient to support the prayer of the petition. (4) The defenders not having purchased the axles in question from the pursuers, are not liable to them in the price thereof. (5) In any event, the action should be sisted, to enable the defenders to raise a process of multiplepoinding.”

In their statement of facts the defenders averred that Banks & Stewart had contracted to deliver to them a much larger quantity of axles than had actually been sent, and that “on receiving delivery of the whole of said axles the defenders are prepared to implement their part of the contract by granting a bill to Banks & Stewart at three months' date for the price thereof” (which was in terms of the contract), “under deduction of such sum as they may be enabled to instruct as the loss they may have sustained through their failure timeously to deliver the said axles.”

The purport of the proof will be found in the opinions of the Court infra.

It appeared that the delivery-order had been transmitted by Carruthers & Co. to a bank, to be given to Banks & Stewart only on payment of the price, and that it had never been so given.

The Sheriff-Substitute (Smith) assoilzied the defenders; and to this judgment the Sheriff (Fraser) adhered, adding this note—

“ Note.—It is with some regret that the Sheriff cannot under this process do justice between the parties. The action is brought against the defenders for the return of goods which they bought in the open market, or for the payment of the price thereof to the pursuers, with whom the defenders never contracted. The defenders knew nothing whatever of Carruthers & Co., but dealt solely with Banks & Stewart, and obtained delivery in the regular course of business of the axle-iron. The pursuers plead that in respect the defenders obtained delivery upon an order from persons who had no power to give it, and on which the pursuers ought not to have acted, the defenders are not entitled to keep the articles so obtained or the price. But here there comes in a new equity in favour of the defenders. It is hard, no doubt, that the pursuers should suffer from an innocent mistake, but it would be harder still if the defenders should be made to suffer through this mistake, which they would do if they were obliged to deliver up goods obtained from Banks & Stewart when they have counterclaims against them which have not been liquidated.

On 3d September 1878 Carruthers & Co. wrote to Banks & Stewart:—‘We have advised Greenock people as to delivery of axles, and the advice was to hold to our order at Greenock.’ The pursuers had no right to deliver up these goods without seeing the written order of Carruthers & Co., and their attention ought to have been awakened to their position by the terms of the order passed on them by Banks & Stewart on 3d September 1878, which is in the following terms:—‘On arrival of axles from Carruthers & Co., Newcastle-on-Tyne, to our order, please forward to Messrs John Harrison & Co., iron merchants, Greenock.’ No such order ever was passed or delivered to Banks & Stewart. The delivery-order, which was attached to the cash-order, having been returned when the cash-order was dishonoured, it is clear that the railway company had no defence against a claim by

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Carruthers & Co., and that they acted wisely in settling.

But then comes the question—To whom is the price of the axles of which Harrison & Go. obtained delivery to be paid? It still remains in their hands, and according to Mr Harrison's evidence, he had and has no counter-claim against Banks & Stewart, except a claim of damages for non-delivery to his firm of Harrison & Co. of the balance of axle-iron which Banks & Stewart had contracted to deliver to them. Whether this is a well-founded claim or not the Sheriff cannot tell; and it could not have been and was not inquired into in this process. It is quite plain that if this claim of damages is less than the sum sued for in this process, the balance must be paid over either to Banks & Stewart or to the railway company; and it is unfortunate that these matters cannot be decided once for all in this process. If the railway company mean to insist upon their claims, their course is to raise an action against Banks & Stewart, and to arrest the money in Harrison & Co. ‘s hands; for the railway company by paying the price to Carruthers & Co. have come into their place and in their right. In the multiplepoinding that will then be raised Harrison & Co. will have the opportunity of establishing their claim of damages and handing over the balance to the party entitled to it. It is very unfortunate that this course had not been adopted at the first, and that a multiplepoinding was only seriously thought of after the present action had arrived at its final stage upon a concluded proof.

In finding that the pursuers have not a direct action against the defenders for return of the goods or the payment of the price, the Sheriff does not mean to question in any way that a suspensive condition prevents the property passing to the vendee even although possession has been obtained. The suspensive conditions are of various kinds. They are enumerated by Professor Bell in his separate work, ‘Inquiries into the Contract of Sale of Goods and Merchandise,’ p. 110, and he lays down a rule in regard to them thus:—‘The effect of a suspending condition in a sale is, that while the event is still undetermined, the sale is pendent, and neither in England is the property passed nor in Scotland is the risk altered.’ The case of Brandt v. Dickson, 18th January 1876, 3 R. 375, shows that the sale is made under a suspensive condition where it is stipulated that a bill or cash shall be given or paid upon delivery, and although delivery be obtained this will not debar the vendor from demanding restitution of the goods against the vendee or his general creditors if the condition be not implemented. But granting all this, it is a different question whether restitution can be enforced against a third party who has specially bought the goods from the vendee, who in his turn had obtained possession of them without fraud. In such a case the equity is all upon the side of the third party who has purchased from the vendee; and undoubtedly the third party in this case, viz., the defenders, would have stood in a better position if their refusal to pay the price of the goods to the pursuers, who came in right of Carruthers & Co., had rested upon the ground that they had already paid Banks & Stewart, instead of resting upon an unliquidated claim of damages. Still the claim must be dealt with according to the same principle that would be applicable if the defenders had stood in the more favourable position of having paid the price.

That Banks & Stewart obtained possession of the goods so as to enable them to give delivery to the defenders is the conclusion to be drawn from the evidence. Carruthers says that he suspected the solvency of Banks & Stewart immediately after his firm had despatched their goods. But Banks himself, at the time he sent the order to the pursuers to make delivery to the defenders, did not think himself insolvent, and had no design to obtain delivery of the goods fraudulently and without an intention of making payment. According to his evidence he demanded delivery from the pursuers as soon as he received the invoice, and in so doing he says that he acted according to his practice in all the transactions he had with Carruthers & Co. There is not, indeed, in any of the numerous letters and telegrams passing between Carruthers & Co. and Banks & Stewart any distinct intimation to the effect that the latter were not to obtain delivery till they honoured the cash-order for the part of the iron that was sent. There is no such distinct intimation made to Banks & Stewart as was made to the railway company, that delivery was only to be given upon a special written order from Carruthers; and therefore in taking delivery it must be held that Banks & Stewart obtained it upon such a title as enabled them to give right to an onerous third party, from whom restitution could not be demanded upon the ground that a suspensive condition of the sale had not been implemented.”

The pursuers appealed to the Court of Session.