Scottish Court of Session Decisions

This was an action for £46, 3s. 5d. at the instance of Scott & Neill, corn merchants in Leith, against J. B. Smith & Company, also corn merchants there. The facts of the case were summarised by the Lord Ordinary in his note as follows:—“The pursuers, as agents and for account of F. M. Duhne, of Hamburg, sold to the defenders 800 quarters of new Saale barley, guaranteed sweet and free from smell on arrival in Leith, at 37s. 6d. per quarter, payment by London bankers’ acceptance at three months from date of bills of lading against shipping documents. It appears that in compliance with Dunne's instructions the buyers’ and bankers’ names were communicated to him on 18th January, and that on 22d and 23d January the barley was shipped partly per steamer ‘Prague,’ and partly by steamer ‘Cumberland,’ Mr Duhne drawing upon the defenders for the amount of the invoice, which was forwarded to the pursuers for them.

On the arrival of the barley at Leith it was objected to as not conform to guarantee, and upon a reference to arbiters the defenders were found entitled to reject it. This was on 2d February. On 3d February the defenders returned the bills of lading to the pursuers, and the pursuers gave to them their cheque for £1432, 17s. 8d., ‘in repayment of the amount of Mr Dunne's invoice.’

Before the arrival of the barley the defenders had resold it to Messrs Younger & Company at 39s. 6d. per quarter, payable at three months, and on arrival it had been likewise rejected by them as not conform to sample.

Pending the arbitration between the pursuers and defenders it was arranged that the defenders should, for the benefit of whom it might concern, endeavour to get offers from brewers for the barley, and on 2d February they received from the pursuers the letter No. 14 [infra], agreeing that any steps taken by them in disposing of the barley, ‘with our consent,’ should not prejudice their position in any way.

Having got an offer for a sample from Messrs John Aitchison & Company, the defenders, under this letter, delivered to them 9 quarters on Saturday morning [3d February], before handing over the bill of lading; and on Monday, 5th, a further quantity of 16 quarters was got by them for Aitchison & Company under a delivery-order granted by the pursuers to the defenders.

For the price of the quantity so disposed of the defenders on 7th February rendered to the pursuers the account sales [infra], amounting to £46, 3s. 5d., and at the same time, or the day before, they rendered to Mr Duhne through the pursuers, the account, bringing out as loss sustained through non-fulfilment of the contract £45,13s. 2d., and for arbiters' fees paid £3,3s.—in all, £48, 16s. 2d.

The latter document was returned by the pursuers in an envelope bearing the words, ‘Don't waste any more good paper.’ The former was returned with the letter quoted in the defenders’, statement [infra], in which the pursuers maintain

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that the 25 quarters had been sold for their account, and not for account of Mr Duhne, and they demand payment of the £46, 3s. 5d.

“The present action is raised to enforce this claim, and it is met by the pleas—(1) That the pursuers having acted solely as Dunne's agents, have no title to sue for the price of the barley sold to Aitchison & Company; and (2) that the defenders having sold the barley for Duhne, have a lien over the price for their counter claim of damages.”

The letter above referred to as No. 14 was as follows:—“ Leith, 2d February 1883. —Messrs J. B. Smith & Co., Leith. Dear Sirs,—We beg to intimate to you that any steps you may take in disposing of the barley p. ‘Prague’ and Cumberland,’ with our consent, will not prejudice your position in any way.—Yours truly, Scott & Neill.”

The account sales referred to were headed:—“Account sales of 25 quarters of Saale barley, sold for account of F. M. Th. Duhne, Esq., Hamburg, through Messrs Scott & Neill, Leith.”

The pursuers' letter referrred to by the Lord Ordinary as quoted in the defenders' statement was as follows:—“12 th February 1883.—From Scott & Neill, Leith. To Messrs J. B. Smith & Co., Leith. We return your a/c. sales of 25 qrs. barley. You have not sold any barley for account of Mr Duhne, of Hamburg; you sold the barley for our account, and we will thank you for a cheque for amount of the enclosed invoice, otherwise we shall send Messrs Aitchison invoice ourselves.”

The Lord Ordinary ( Lee) repelled the defences, and decerned against the defenders in terms of the conclusions of the summons.

Note.— [After the narrative above quoted]—Apart from the transaction by which they made the sale to Aitchison & Company of this 25 quarters of barley, I apprehend that the right of the defenders was to reject the barley, and to refuse payment or claim repayment of the price, and to constitute their claim of damages against Duhne as the disclosed principal in the contract of sale. Had their claim to reject the barley and to be relieved of the price been at once admitted by the pursuers, as Dunne's agents, their claim of damages could not in my opinion have been pleaded against the pursuers’ lien upon the goods in security of their advances on behalf of the principal, for the right of the pursuers, as factors for Duhne, if they had admitted the rejection and advanced money on his account, was to hold the goods in security of their advances, and they could have made their lien effectual, not only against the goods themselves, but against the price of any portion which might have been sold—Bell's Comm. ii. (5th ed.), 116; Addison on Contracts (5th ed.), p. 59; Tudor's L.C. 676. If the 25 quarters had been accepted by the defenders under an agreement with the pursuers, as Duhne's agents, that this should not prejudice their claim to reject the goods generally, I see no reason to doubt that the pursuers would have had a good title to require payment of the price, and upon the authorities neither Duhne, nor anyone in his right, could have deprived them of this right without settling the balance upon their account.

Now, as the case stands, the only difference is that the defenders have made the sale to Aitchison & Company upon the authority of a letter from the pursuers, which guarantees them against being prejudiced in their position by the steps they took with their consent. I do not think that letter can have the effect of putting the defenders in a better position than they would have occupied had their rejection of the goods been accepted. In so far as their acting upon it made them liable for the freight of the cargo per ‘Prague,’ I think they are entitled to be relieved. But I cannot see that it should entitle them to plead their claim of damages against Duhne as a set-off against the price of the goods upon which the pursuers, as Duhne's agents, have a preferable claim; still less do I see that it enables them to dispute the title of Duhne's agents to require payment of the price of the goods upon which, as against Duhne, they had a right of lien.

My view is that this 25 quarters of barley was sold upon the authority and responsibility of the pursuers; that Duhne could not have prevented their recovering the price, and holding it, by virtue of their right of lien in lieu of the barley; and that the defenders, by the transaction embodied in the letter No. 14 of process, acquired no right to constitute themselves agents for Duhne to the effect of setting off their claim of damages against the price which they received.

“On the whole, although I was much impressed by the ingenuity of the argument in support of the defenders' pleas, I think that the pursuers, upon relieving the defenders of the claim of freight which they have incurred by presenting the bills of lading, are entitled to decree. I shall therefore give a finding to this effect, leaving the defenders to constitute their claim of damages against Duhne, and to make it effectual according to law.”

The defenders reclaimed, and argued—The barley and bills of lading were delivered to them for the purpose of selling on account of Duhne and as his agents. They had therefore a lien over the price for which they sold it for any claim they might have against him. The pursuers never had any right of property in the cargo, but acted merely as agents of Duhne in passing the goods to them, and had no title to sue them, and the defender therefore came in their place as Duhne's agents—Bell's Comm. ii. (7th ed.), 109 and 111.

The pursuers replied—The defenders received authority from them to sell the goods, and were bound to account to them for the price. The defenders acted as their agents, and not Duhne's—Addison on Contracts (8th ed.), p. 62.

At advising—