Scottish Court of Session Decisions

The Married Women's Property (Scotland) Act 1877, which came into effect on 1st January 1878, provides (sec. 3)—“The jus mariti and rights of administration of the husband shall be excluded from the wages and earnings of any married woman acquired or gained by her after the commencement of this Act in any employment, occupation, or trade in which she is engaged, or in any business which she carries on under her own name, and shall also be excluded from any money or property acquired by her after the commencement of this Act through the exercise of any literary, artistic, or scientific skill, and such wages, earnings, money, or property and all investments thereof, shall be deemed to be settled to her sole and separate use, and her receipts shall be a good discharge for such wages, earnings, money, or property, and investments thereof.”

Richard Ferguson, ironmonger, Argyle Street, Glasgow, was married in 1872 to Margaret Scott, who at that time, and for some years previously, had been carrying on a successful business as a milliner at 29 Argyle Arcade, Glasgow, under the name of “M. Scott.” There was no marriage-contract between them. After her marriage Mrs Ferguson continued to carry on her business as formerly under her maiden name of “M. Scott,” and her husband did not interfere in any way in the management or carrying on of the business.

On the 12th of April 1882 the estates of Richard Ferguson, who was the sole partner of the firm of J. & R. Ferguson, ironmongers, were sequestrated, and James Henderson Ferguson, accountant in Glasgow, was appointed trustee. He thereupon, in virtue of his act and warrant, took possession of the millinery shop and business of “M. Scott,” along with the whole stock and assets.

Mrs Ferguson had, in the course of her business as a milliner, accepted, under the name “M. Scott,” a bill at four months, dated 1st February 1882, for £32, 0s. 4d., drawn by Willis, Nelson; & Company, straw hat manufacturers and warehousemen, Miller Street, Glasgow, for the price of goods sold and delivered to her under her trading name of M. Scott. This bill not being paid, was protested by Willis, Nelson, & Company, who in virtue of an extract registered protest caused a poinding to be executed of various articles constituting part of the stock-in-trade contained in “M. Scott's” shop.

Willis, Nelson, & Company then applied for warrant to sell the articles embraced by their poinding. On 22d September 1882 a petition was presented in the Sheriff Court of Lanarkshire at Glasgow by the trustee on the sequestrated estate of Richard Ferguson, praying that they should be interdicted from proceeding to sell or interfere with these articles. The pursuer set forth that there was not any exclusion of the bankrupt's legal rights as Mrs Ferguson's husband, and that no arrangement was entered into between the spouses for any settlement of his interests in the business. He further averred that large sums of money were obtained by Ferguson from his wife's business, and that no steps were ever taken by Mrs Ferguson for protection under any of the Acts relating to the property of married women in Scotland. He also alleged that since May or June 1883 he (pursuer) had been in actual possession of Mrs Ferguson's business, which he was actually carrying on, having a person in charge supervising the business, who took charge of the accounts and kept the keys.

The defenders (Willis, Nelson, & Company) alleged that both before and since January 1878, when the Act of 1877 came into force, the spouses had treated the business and assets of M. Scott as solely the property of Mrs Ferguson; that the business had been carried on in the name of M. Scott, and solely for her behoof; that any money advanced to Mr Ferguson was by way of a loan and was so entered in the books; that the bill on which the diligence was founded was addressed to “M. Scott,” and accepted in that name, and it was on her credit and on the stock and assets of her business that the goods were supplied; and that since January 1878 the business in question had been carried on by Mrs Ferguson for her own behoof, and that her millinery business was within the meaning of the Act a trade or a business carried on for her own behoof. They also averred that part, if not all, the stock-in-trade of the business consisted of stock and assets realised out of earnings therein made since 1st January 1878. To this last averment the pursuer replied that, assuming its truth, the stock as at the date of sequestration was to be regarded as surrogatum for that existing at 1st January 1878.

The pursuer pleaded—“(1) By virtue of the marriage the business of Mrs Ferguson, carried on by her under the style or form of ‘M. Scott,’ and the whole property and assets thereof, became vested in her husband, and by virtue of his sequestration are now vested in the petitioner.”

The defender pleaded—“(3) Mrs Ferguson having within the meaning of the Married Women's Property (Scotland) Act 1877 carried on the business of M. Scott under her own name, and by authority of the Act for her own behoof in whole or in part, her creditors, or the creditors of said business, are entitled to have the estate of said business kept separate from the property of Richard Ferguson, and to do diligence against said estate for said debts.”

After a proof, the Sheriff-Substitute ( Guthrie) pronounced this interlocutor:—“Finds that the petitioner is trustee on the sequestrated estate of J. & R. Ferguson, ironmongers, Argyle Street, conform to act and warrant dated 12th April 1882, of which firm Richard Ferguson was sole partner: Finds that on 11th March 1872 the said Richard Ferguson was married to Margaret Scott, milliner, Argyle Arcade: Finds that after the said marriage Mrs Ferguson continued to carry on her business as milliner under the name of M. Scott, as a separate and distinct business, without any interference on the part of her husband, and kept separate books and a separate bank account: Finds that she further continued to do so without any change from 1st January 1878, the commencement of the Married Women's Property (Scotland) Act, till after the said sequestration: Finds that by virtue of the said Act the said millinery

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business and stock-in-trade, and profits thereof, do not form part of the sequestrated estate of J. & R. Ferguson, or Richard Ferguson, and that the petitioner, as trustee foresaid, has no right or title to interfere with or take possession of the same: Therefore refuses the interdict, and decerns, &c.

“ Note.—The petitioner, as trustee on the sequestrated estate of J. & R. Ferguson, ironmongers, of which firm Richard Ferguson was sole partner, seeks interdict against the sale of certain articles which form part of the stock-in-trade of M. Scott, milliner, Argyle Arcade, upon the ground that that business and stock fall under the sequestration. He maintains that they do so because Mr Ferguson has been since 1870 the husband of Miss Scott, though the millinery business has before and since been carried on by her in her own name. It cannot be denied that according to the common law of Scotland, which appears to be somewhat harsher to married women in this respect than the law of England, at least as the latter is tempered by equity, Miss Scott's business, and her earnings in that business, are subject to the jus mariti of her husband—in popular language, that they became his by the marriage; that in carrying on trade or business, she was, in the eye of the law, merely his agent; and that as he was liable for the debts contracted by his wife in that separate business, so he was entitled to appropriate and control whatever she earned in it. So the law remained (except that protection orders could be obtained in cases of desertion under The Conjugal Rights Act of 1861) until 1877, when the Married Women's Property Act excluded the jus mariti ‘from the wages and earnings’ of any married woman acquired or gained by her after 1st January 1878. ‘in any employment, occupation, or trade in which she is engaged, or in any business which she carries on under her own name.’ The question is, whether the protection from her husband and his creditors given to Miss Scott and her business creditors extends not only to her earnings from year to year since 1st January 1878, but to the stock-in-trade by means of which these earnings are made. The petitioner says that when the Act passed in 1877 the stock-in-trade was undoubtedly the property of her husband according to the law of Scotland, and that while the wife's earnings in her business as a milliner are since that date hers, and exempt from any interference by her husband or his creditors, there is nothing in the statute to deprive him, or at least his creditors, of his vested right in the stock-in-trade. On the other hand, the defenders, who are poinding creditors of M. Scott, argue that it would be vain to protect the earnings of the wife if the business appliances by which these earnings are made remain open to the diligence of the husband's creditors; and they refer to the English case of Ashworth v. Outram, L.R. 5 Ch. D., and 46 L.J., Ch. 687, where under an English Act of Parliament in terms nearly the same as this, and in very similar circumstances, it was held ‘that if the wages and earnings of a married woman are to be protected in an employment, the property, capital, stock, and effects embarked and employed in it at the time of the marriage, if they are allowed to be continued in the employment, and wages and earnings are allowed to be made therefrom, are protected by this section as necessary to the fair interpretation of the Act.’ The defenders also refer to the case of Davidson v. Davidson, 1867, 5 Macph. 710, as showing that even by the common law of Scotland there may be a renunciation of the jus mariti established by facts and circumstances to the effect of securing to a married woman an absolute right to her savings from her own earnings. That is a very important and novel case in the law of Scotland, but it has not, so far as I can see, a very direct relation to the present question. It was not a question with the husband's creditors, but with himself (though that is not the most important distinction), and the judgment was expressly put upon the ground that the spouses had been living separately, and that the fund had been created by the wife's savings from an alimentary fund constituted by verbal or implied agreement during the separation. Still the case might be taken as an authority, for the proposition, if that were of any moment here, that the jus mariti may be renounced or the husband's assent to his wife's carrying on a separate business may be effectually given without a formal writing, or without any writing.

“While it is clear, and indeed conceded, that by virtue of the statute, Mrs Ferguson's earnings since January 1878 are free from the jus mariti of her husband, and cannot be affected by the diligence of his creditors, it is equally clear that this is merely a result of the enactment, and could not have been accomplished by any voluntary act of the husband, or any postnuptial contract between the spouses apart from the statute. A husband cannot gratuitously withdraw part of his estate from his creditors by making it a provision for his wife taking effect during the subsistence of the marriage. This has been decided in a long series of recent cases, with which Davidson v. Davidson is quite consistent. It is thus to the terms of the Act alone that we have to look, and the case of Ashworth v. Outram is useful only so far as it guides to the true construction of the Act. The differences between our law and that of England are such that we cannot regard it as an authority except so far as it shows how to apply principles of interpretation, which are common to all systems of jurisprudence. While it is not relevant or sufficient to say that the proof shows that Mr Ferguson renounced his jus mariti over his business, and made it his wife's—a thing which he could not effectually do quoad his creditors, whom the pursuer represents—it is altogether a different question, Whether and how far the Act of Parliament did make it her separate estate? Can it be held that her earnings from year to year are separable from the business and stock-in-trade which ex concessis were in law the husband's at January 1st 1878? Can we distinguish the capital employed at that time, and divide the annual profits into two parts—interest on capital, and wages for skill and labour? It is just possible that if the rights of parties are to be accurately adjusted that may have to be done in some cases, or even here, but about that I have no opinion. There is, however, no such question in this case, in which the pursuer attempts to seize the wife's whole business without paying any regard to her earnings—which the statute protects—beyond the suggestion that she may claim for them in

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the sequestration. It appears to me that that is not the protection which the Legislature intends to give, and does give. It protects the wife's earnings ‘in any business which she carries on in her own name,’ and ‘these earnings are deemed to be settled to her sole and separate use.’ In the words of Lord Coleridge in Ashworth v. Out-ram—‘How far does that carry us? It seems to me that it must carry the protection, I will not say beyond the wages and earnings, but it must carry the protection of the wages and earnings to those things which are necessary to make the wages and earnings which are to be protected. Therefore the effect of the Act, if fairly construed, is to protect the trade or business of the married woman which she carries on separately from her husband; for without the protection of the trade itself it is manifest that the protection of the-wages and earnings in the trade is impossible. How can a person carry on an occupation or employment without materials? Can wages be made in any employment without what we may call tools? How could earnings acquired by the exercise of artistic skill be protected without protecting the pens and papers, the canvas and brushes, or the other necessary implements which a person has to use in order to obtain the literary, artistic, or scientific result? It is plain that to give—I do not say a liberal or loose—but a rational construction to the Act the protection afforded by it must be extended so far.’ In short, Mrs Ferguson's earnings in the business are not only exempt from the jus mariti, but are deemed to be settled to her separate use, and they cannot be so if the apparatus of goodwill, connection, and stock-in-trade, by which alone they exist, are carried by the sequestration of her husband to the trustee for his creditors, and are liable to be sold and realised by him. It may be a question how far the creditors of a husband who after 1st January 1878 has allowed his wife to carry on a separate business, or of one who after that date has furnished capital with which his wife has begun and prosecuted in her own name a successful trade (for the two cases appear to be alike), may make good a claim to reimbursement of his contribution to the going business as a donation inter virum et uxorem. But it is not consistent with the provisions of the Act that that claim, if it exists, should be enforced by the trustees taking possession of the whole business carried on by the wife, and dealing with it as part of the husband's estate. That would be not only to set aside the statute, but to make it, as was said in argument', a mere trap for the creditors who have trusted the wife as a separate trader.”

The pursuer appealed to the Court of Session. After hearing counsel, the Court allowed additional proof, which was led before Lord Shand. It appeared that the pursuer had had exhibited to him a balance-book of Mrs Ferguson's business of M. Scott when he was investigating the husband's affairs at the instance of creditors before the bankruptcy. This book showed that the business had been falling off since 1877. The pursuer had been entirely unable to recover it after the sequestration, and under a commission granted by the Court it was not recovered. A balance-sheet of M. Scott's business as at June 17, 1881, showed a sum of £789, 9s. 6d. as owing by the business of J. & R. Ferguson to her. Mrs Ferguson deponed that since her marriage she had provided the household expenses.

The pursuer deponed that from documents in his hands Mr Ferguson appeared to have contributed to these expenses.

Argued for the pursuer—It was of importance to consider the husband's position. Was he proprietor of the stock-in-trade, or was he merely a creditor of his wife's? If the former, then the Act must be held, though it did not say so, to protect and secure to a wife, not only her earnings, but also the stock-in-trade No benefit could be derived by an appeal to English law, as the common law was different in the two countries, and so the statutes which affected the common law produced separate results. Besides, the case of Ashworth was one into which the elements of rights of creditors and of sequestration did not enter. The words of sec. 3 of the Married “Women's Property Act 1877 only protected a wife's “wages or earnings,” and it could be shown from the proof that none of these were invested in this stock-in-trade. If not carried by the Act to the wife, the stock-in-trade remained the property of the husband, whose it became at the date of the marriage, and to whom no equivalent in money has been given. The Act was not intended to apply to a case like the present, where the wife carried on business with her husband's money and as his agent. It was said that “earnings” meant profits, and that by implication the capital of the business must go along with them as the means by which they are made, but the Act could not apply to undrawn profits. Even if the Act did give the wife the whole profits drawn or undrawn, it merely gave her a right to an accounting. She became a creditor of her husband's business, not a partner in it.

Argued for the respondent—The reasoning in the case of Ashworth was sound, and the principles there laid down were equally applicable both to England and to Scotland. The husband could not, since the passing of the Act, step in and claim the stock and implements by which he had set his wife up in business. The proper interpretation of the statute would be one which would protect not merely the earnings and profits but also the whole funds embarked in the undertaking, otherwise the wife would be only the reputed owner The Act applied to all cases where a wife is in business of any kind whatever where credit is required, and where the wife pledged her own name. The interpretation suggested by the other side would do away with the very benefit which the Act was intended to confer. Here the millinery business was carried on solely by M. Scott, but it was proposed to make her responsible for the debts of J. & R. Ferguson contracted in their business as ironmongers. As the stock which now poinded was not in the shop in 1878, but was only purchased recently, that fact should be sufficient to displace the pursuer's claim. If the husband was a creditor of his wife's there would be no necessity for an accounting, because he would get his share out of his wife's sequestration. The true position of matters was that the husband was not creditor but debtor to M. Scott, and that by the passing of the statute the capital of the millinery business became the wife's subject to a right of accounting—Fraser's Husband and Wife, 699; Davidson v. Davidson, 1867, 5 Macph. 710;

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Biggart v. City of Glasgow Bank, January, 15, 1879, 5 R. 470.

At advising—