Scottish Court of Session Decisions

The British Legal Life Assurance and Loan Company (Limited), carrying on business in Glasgow and Dundee, raised an action of interdict in the Sheriff Court of Forfarshire at Dundee in December 1885 against the Pearl Assurance Company (Limited), London, which carried on business in Dundee, and also against John Dewars, residing there, the agent of the said company for that district.

The petitioner prayed the Court to interdict the defenders from printing, publishing, or circulating, or causing to be printed, published, or circulated, in Dundee and neighbourhood certain handbills and circulars containing matter calculated to injuriously affect the pursuers' business. Ultimately, in consequence of amendments, interdict was only asked against a bill entitled “Scandalous Revelations.”

The pursuers averred that for twelve months prior to the raising of action the defenders had circulated among their (the pursuers') policy-holders, as well as among the general public of Dundee, hand-bills and circulars containing false and slanderous statements about them, and especially that they had published and circulated a bill termed “Scandalous Revelations.” They alleged that the circulation of this print bad induced a large number of policy-holders to transfer their policies from the pursuers' to the defenders' office, and that they (the pursuers) had thus suffered great loss to their business in Dundee and the neighbourhood.

The defenders did not attempt to justify the statements in the hand-bill, but averred that in issuing hand-bills and circulars they merely acted as the pursuers had been doing, and that they (the pursuers) had printed and circulated libellous and injurious statements concerning them with a view to injuring their business and misleading the public. They also averred as follows—“Explained that the defenders' company do all in their power to prevent their superintendents, agents, collectors, and others from illegally interfering in any way with the business of other companies. Before his appointment, every superintendent, agent, and collector of the defenders' company is required to sign the rules and instructions laid down by the company for his conduct, and he likewise receives a full copy of these printed in his collection-book, which he is also required to sign, and must always carry about with him. These rules and instructions are referred to for their terms, and a printed copy is lodged herewith and founded on. One of these instructions which requires to be signed, and which forms an essential part of his appointment, is the following:—‘No. 2. Some unprincipled collectors make a practice of abusing and libelling the character of all other assurance companies but the one by which they are engaged. It is our wish that our collectors will avoid any approach to this disreputable conduct, as it only tends to destroy the confidence of the public in all offices alike, and prevents collectors from taking proposals where they would find no difficulty had not the above destructive course been pursued. Any interference on the part of a collector of any other company or society with the business of this company should be at once reported, with full particulars, to the manager, that the directors of the company whose collector has committed himself may” be communicated with.’

The pursuers pleaded, inter alia—“(1) The proceedings of the defenders complained of being illegal and unwarrantable, and highly injurious to the pursuers' business, and the pursuers having good reason to believe that the defenders will continue to commit the said illegal acts, they are entitled to the interdict craved.”

The defenders pleaded, inter alia—“(2) The proceedings alleged against the defenders' company being ultravires of the officials of the said company, the said action is incompetent against the defenders as a limited company incorporated under the Companies Acts. (6) The pursuers having themselves acted towards the defenders in a manner similar to that now complained of by them, they have thereby deprived themselves of the remedies sought for in this action, even if these were to any extent competent; or other

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wise, there arises compensatio injuriarum.”

After sundry procedure in the Sheriff Court and in the Court of Session a proof was taken in the Sheriff Court, the import of which appears from the opinions infra.

On 8th December 1886 the Sheriff-Substitute ( Campbell Smith) pronounced this interlocutor:—“Finds that the handbill entitled ‘Scandalous Revelations’ was prepared and printed in Dundee, and extensively published in and about Dundee by officials of the defenders' company, including the district superintendent John Dewars, who is called as a defender; but finds that the preparation and uttering of the said slanderous document was not directly effected by the Pearl Insurance Company, or expressly authorised by them, or carried out with their knowledge or assent: Further, finds that the composition and printing of said handbill was executed on the employment of one or more officials of the defenders' company, and that the uttering of it was effected by canvassers and other officials of said company, including the defender Dewars, on purpose to improve its business through inflicting injury on pursuers' business: Further, finds in fact that the defenders, as a company, authorised (1) canvassing and transference of the contributors of the British Legal; (2) canvassing by means of handbills, though not of the handbill complained of; and (3) that the defenders' business derived benefit from said conduct of the officials: Finds in law that the defender Dewars is liable to answer as an individual for the utterance of said handbill, and further, that the defenders are liable for the illegal acts of their officials in respect that they acted in the defenders' interest and within the scope of their implied mandate: Therefore decerns and grants interdict against uttering or publishing said handbill headed ‘Scandalous Revelations:’ Finds the pursuers entitled to expenses on Scale II., subject to deduction of two-fifths of the taxed amount, including the fees of counsel,&c.

“ Note.—The main question arising on the proof is whether the corporate defenders fabricated and uttered the said handbill entitled ‘Scandalous Revelations,' either directly or by agents for whom they are responsible.

“There is no proof whatever that any direct or leading official of the defenders' company composed this handbill, or uttered it, or knew of its existence until the raising of this action had forced it upon their attention. Two representatives of defenders from London, Mr P. J. Foley and Mr James Roll—the former managing director, the other an ordinary director who appears to take special interest in the Scotch department of the business—both swear that they had nothing to do with the publication of this bill. A minute of directors is the proper evidence of a resolution binding a large company, but of the pursuers' allegations there is neither written nor oral evidence. But although a company may not be the direct authors of a legal wrong—the express instructors to print and publish slander—they may be the indirect but nevertheless responsible authors because of the acts of their agents or servants … Here what the defenders gave their servants to do was canvassing—that is, puffing their own company, disparaging rivals, and, when possible, ‘transferring’ to themselves the contributories of rivals with alltheir obligations, but no part of the premiums they had been paying, it may be for years. They taught their servants by precept and example to canvass by means of handbills, the gist of the handbills being the disparagement of rivals. The servants were imitative rather than intelligent, and the zeal with which they set about doing their masters ‘work in their masters’ own way has carried them over the bounds permitted by the law of libel. If a master enlists the zeal of a servant for purposes of aggression or aggressive business competition, and if he has not selected a servant with the proper knowledge or discretion or has not instructed him sufficiently, and if the uninstructed zeal serves the master's ends, why should he not be responsible?

“There are, in my opinion, four material elements of fact established against the defenders. First, They authorised an attack to be made upon the business of the pursuers' company by directing or encouraging their canvassers to persuade the contributories of the pursuers' company to desert the pursuers and go over to the defenders. Second, They prepared and printed handbills in London, and placed them in the hands of their canvassers for distribution in Dundee, thus by implication authorising this mode of canvassing by handbills as a mode fit to be adopted and used by their canvassers. Third, Their canvassers and collectors being so led to believe that canvassing by handbill was within the sphere of their mandate, prepared, printed, and uttered handbills, and, inter alia, the slanderous handbill complained of. Fourth, That said bill was an effective although illegal instrument for canvassing purposes, and was used to the benefit of the defenders, and to the prejudice of the pursuers.

Now, are these elements of fact in their combination sufficient to involve the defenders as a company in liability? The difficulty lies in the fact rather than in the law, and it lurks in the uncertainty that is left to exist about the exact scope of the employment given to the defenders' servants. They for certain thought they were doing well both for themselves and for their masters when they were using this offensive handbill. It is asserted that the master is not liable for the servant's crime, and generally speaking he is not, because crime is for the most part personal. But the railway company is often liable for the railway servant's culpable homicide; and the master is often liable for the offence of the servant against laws applicable to the manufacture and sale of spirituous liquor. The legal quality of the servant's wrong scarcely affords any available test of the master's liability. The true test lies in what the servant was employed to do; if he does it right, all well for his master; if he does it ill, and to the injury of some extraneous person, his master is liable for his wrong-doing, just as much as if he had done it himself.” …

The defenders appealed to the Court of Session, and argued—Dewars had admittedly done what was wrong. Interdict, however, was not the proper remedy against the company, as there was no evidence that they knew anything about the actings of their servants in circulating this bill. By their regulations no bills were allowed to be distributed except such as were issued by the head office. The remedy asked was novel, and to warrant interdict being granted guilt must be

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brought home to the company. The company did not issue this bill, and it was in direct opposition to their rules. Damages and not interdict was the proper remedy— Houldsworth v. City of Glasgow Bank, July 4, 1879, 6 R. 1164.

Replied for the respondents—The libel was uttered by the defender's servants, and to some extent in the knowledge of the London officials. No doubt the rule referred to was issued to the defenders' agents, but it was never enforced, and long after the action was raised this libellous handbill was being freely circulated. The London officials acted all along with great indifference, and they must be held as knowing and as being responsible for the actings of their servant in this matter. Interdict was the appropriate remedy for such actings. A company whose business was being undermined was not obliged to wait and raise an action of damages, but could obtain interdict against the wrongdoer, whether an individual or a company. Sufficient had been shown in the present case to warrant the interdict craved— Wardrope v. Duke of Hamilton, June 24, 1876, 3 R. 876; M'Kay v. Bank of New Brunswick, 5 P. C. App. 394; Quartz Hill Gold Company, 20 Ch. D. 501; Loog v. Bean, 26 Ch. D. 306; Thorley's Cattle Food Company, 14 Ch. D. 763.

At advising—