Scottish Court of Session Decisions

This was an action brought in the Sheriff Court at Edinburgh by James Gemmell junior, rag merchant, 69 Cowgate, Edinburgh, against Annandale & Son, Limited, paper manufacturers, Polton. The pursuer craved decree (1) for payment of the sum of £19, 1s. 6d., being the price of certain rags purchased by the defenders from him; and (2) for delivery of three parcels of rags which the pursuer alleged were his property, and of which he maintained the defenders had taken and retained possession wrongfully, improperly, and without the pursuer's consent, or failing such delivery for payment of the sum of £22, 14s. 6d. as damages.

The pursuer averred that he was the sole partner in the business carried on at 69 Cowgate, that he had sold and delivered certain rags to the defenders, but that they had not paid for them, and that the price, viz., £19, 1s. 6d., the sum first sued for, was still due and resting-owing by them to him. He also averred that while he was in prison under a conviction for assaulting his father (James Gemmell senior), his sister, and his brother, his father, who, as the pursuer averred, had ceased to have any interest in the Cowgate business, and had no authority to deal on the pursuer's behalf, wrongfully, illegally, and without the consent or authority of the pursuer, and in his absence. removed certain rags from the pursuer's premises, and delivered them to the defenders.

The defenders on the other hand averred that they had paid the sum of £19, 1s. 6d. referred to, and had received a valid and

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sufficient receipt therefor, which they produced, and that as regards the parcels of rags above mentioned they had bought them in the ordinary course of business from the pursuer's father, who was originally sole partner in the Cowgate business, and still retained an interest in it, and who had always taken an active part in its management.

The pursuer pleaded, inter alia—“(1) The pursuer having sold and delivered to the defenders the goods first concluded for at the price stated, and said price being due and resting-owing to the pursuer, decree should be pronounced therefor with expenses. (2) The defenders having wrongfully, without the consent or authority of the pursuer, and illegally procured possession of the goods of the pursuer, as condescended on, and which goods they still retain, they ought to be decerned to make delivery thereof as craved.”

The defenders pleaded, inter alia—“(2) No title to sue. (6) In respect that the pursuer and the said James Gemmell senior are partners in business, the defenders are not liable, and should be assoilzied with expenses. (7) Or alternatively, in respect that James Gemmell senior was held out by the pursuer to the defenders as his manager, and was prœpositus negotiis, defenders are not liable, and are entitled to absolvitor.”

After sundry procedure a proof was allowed and led, the result of which may be summarised as follows:—For a number of years previous to Whitsunday 1892 James Gemmell senior, the pursuer's father, carried on business as a rag merchant at 69 Cowgate under his own name, and on his own behalf, being, however, assisted by his family. At Whitsunday 1892 certain transactions took place between the pursuer and his father, the result of which was that the pursuer took the premises in Cowgate, the father at first being cautioner for the rent, the signboard over the door was changed to “James Gemmell junior, Licensed Broker,” the broker's licence being taken out in his name, and the business account headings and memorandum and letter forms were printed in the name of “James Gemmell junior, merchant.”

There was a conflict of evidence between the pursuer on the one hand, and his father, sister, and brother on the other hand, as to the true nature and effect of these transactions, the pursuer maintaining that he acquired his father's right in the business for value, as the documents produced by him represented, and the father maintaining that in fact he still continued to be a partner in the business, which was to be carried on in the pursuer's name for behoof of the whole family. He also explained that the apparent sale of the stock was “to protect the newly created business and creditors from the ravages of the old ones.” He had got into financial difficulties at that time. The Court ultimately held that upon the evidence the pursuer had failed to prove that any material change in the ownership and conduct of the business took place in 1892, or thereafter, or that the pursuer then became sole owner. There was no proof that any intimation of a change in the ownership of the business was given to the defenders. At Whitsunday 1892 Gemmell senior left 69 Cowgate, where he had previously resided, and went to Elm Row, where for a couple of years or so he carried on business as a bookseller. For a short time at first the pursuer lived with his father at Elm Row, but soon left him and returned to live at 69 Cowgate. In 1894 or 1895 Gemmell senior was deprived of all his effects under a process of cessio, and thereafter he came back to 69 Cowgate and continued to live there till 1st April 1898. During this time he did work in connection with the business, but the work which he did was clerk's and other work in the shop. He did not call upon customers.

The defenders began to deal with James Gemmell senior in 1884. Up to 1892 or 1893 they did a considerable business with the Gemmells, during the first part of the time transacting with the father, but latterly chiefly with the pursuer. Between 1894 and 1898 there were no dealings between them, but on 15th or 16th February 1898 the pursuer came to Polton and arranged a sale of some rags to the defenders at the price of £19, 1s. 6d. These rags were duly delivered to the defenders on 17th February. At the same interview the pursuer arranged to send a sample bale of certain other rags to the defenders for their inspection.

On 20th February 1898 the pursuer was arrested for assaulting his father, sister, and brother, and was confined in the Edinburgh police cells till 22nd February, when he was tried, convicted, and sentenced to forty days' imprisonment without the option of a fine. He remained in the Calton Prison undergoing this sentence till 2nd April 1898. During the time he was in prison the place of business at 69 Cowgate was kept open, and was managed by the pursuer's father with the assistance of the pursuer's brother and sister.

On 22nd February a letter was received at 69 Cowgate addressed to James Gemmell junior enclosing a crossed cheque payable to him. This letter was opened by James Gemmell senior. On the same day the defenders received the account receipted by the pursuer “ p.p J.G.” This receipt was in the handwriting of and was signed by James Gemmell senior.

On 1st March the defenders received a memorandum bearing to be from the pursuer, but in the handwriting of and signed by his father as for the pursuer, stating that as promised he had forwarded the sample bale for the defenders' inspection, and asking them to quote their highest price therefor. The defenders on 4th March wrote offering 9s. per cwt. On 5th March James Gemmell senior came to Polton and accepted their offer. He received payment for the sample bale, and gave a receipt for the money. The rest of the rags were delivered to the defenders on the same day, and on 8th March the pursuer's father received the sum agreed upon as the price, and granted a receipt for it. Thereafter Gemmell senior sold another parcel of rags

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to the defenders for £2, 12s. 10d., which sum he received from them in cash, and gave them a receipt for it signed by him.

On the same day Gemmell senior informed the defenders that his son, the pursuer, was in jail, and that he (Gemmell senior) had been unable to get the money for the crossed cheque in pursuer's favour for £19, 1s. 6d., mentioned supra, and asked them to take it hack, and give him a cheque in his own favour for the same sum, as he required the money for rent and other business expenses. The defenders complied with this request.

The pursuer deponed that when he saw the defenders on 15th or 16th February he told them that the price would be 11s. per cwt. This was denied by the defenders' representative. He also said that the other parcel of rags was sold below its true price, and that the value of the goods obtained by the defenders from the pursuer's father as above mentioned was in fact £22, 14s. 6d., instead of £18, 16s. 7d., being the amount of the sums paid by them to Gemmell senior.

A sequestration for rent had in the meantime been served upon the pursuer while in jail. An inventory was taken by an officer, but no sale was ever carried out. The rent was subsequently paid by the pursuer. Gemmell senior did not pay the rent with the money he got from the defenders. Before he got the cheque in his own favour from the defenders he had tried to get the money for the crossed cheque from the factor on the Cowgate premises, offering to pay him £5 towards the rent, if the factor would give him cash for the balance, but this the factor declined to do. The pursuer on 23rd March, after the sequestration for rent was served upon him, sent his law-agent with a mandate to Gemmell senior to get the Annandale's cheque from him, but Gemmell senior refused to give any account of it.

The pursuer was aware that this cheque would be coming from the defenders while he was in prison, but he did not take any steps to have the payment of it stopped.

The day before the pursuer got out of prison, his father, brother, and sister left the Cowgate premises, and gave up the keys to the law-agent for the factor. Gemmell senior also sent to the pursuer's law-agent an account of receipts and disbursements during the time that the pursuer was in prison. This account showed a balance of £37, 11s. 5d., “cash in hand retained in part payment of remuneration and share of profits.” The pursuer did not take any steps to recover this sum from his father.

On 5th January 1899 the Sheriff-Substitute ( Hamilton) issued the following interlocutor:—“Finds that the pursuer has failed to prove that he and not his father is the owner of the business mentioned on record: Sustains the second plea-in-law for the defenders: Dismisses the action, and decerns: Finds the defenders entitled to expenses, and remits,” &c.

Note.—“The so-called sale of the business in 1892 evidently was a device resorted to for the purpose of defeating the claims of the elder Gemmell's creditors. It was therefore a fraudulent transaction, and the pursuer, who was a party to it, cannot, in a question with his father (which this really is), arrogate to himself the position of a bona fide purchaser of the business. His title of ownership is no better, perhaps it is even worse, than his father's.”

The pursuer appealed to the Court of Session, and argued—1. The pursuer's father was not a partner in the business. 2. He was not prœpositus negotiis, and was not held out by the pursuer to be so, at least as regards transactions or acts of any kind outside the shop. Between 1894 and 1898 his work for the business was confined to clerk's and other work done in the shop. He did not call upon customers, and was never authorised by the pursuer to do so. A servant only bound his master if acting within the scope of his employment. The defenders had no right to presume the authority of the pursuer's father to receive payments away from the shop, or to negotiate sales. Payment to a subordinate was only good if made to him in the course of his employment—Smith's Mercantile Law (10th ed.), vol. i. 154. No doubt authority to receive payment was presumed from the fact of being found apparently employed in the payee's counting house at his place of business, and here it must be conceded that if the defenders had paid the sum first sued for over the counter of the pursuer's shop to the pursuer's father, and had got a receipt from him, the payment would have been good, even although in fact the pursuer never got the money— Barrett v. Deere (1828), 1 Moody and Malkin, 200. The same rule might have applied if they had sent the cash or a cheque payable to bearer by post to the pursuer's place of business, and had got back a receipt in the same terms as that now produced. It might even also be conceded that, if the defenders had refused to change the crossed cheque into a cheque in favour of the pursuers father, and the payment founded on had been the crossed cheque originally sent, the payment would have been good, although the pursuer's father had succeeded in cashing the cheque, and appropriating the money. But the rule as to presumed authority to receive payments and grant receipts therefor only applied to payments made at the payee's place of business (see Barrett v. Deere, cit., per Lord Tenterden, C. J., at page 201). It did not apply to payments made to subordinates at other places. The payments therefore to the pursuer's father made by the defenders at Polton were not good. Moreover, the statements made by the pursuer's father as to the position of affairs, and his request to have the cheque changed, should have put the defenders upon their inquiry, and if they had made inquiry they would have found that the pursuer's father had no authority to receive payments on behalf of the pursuer, or indeed to represent him at all.

Argued for the defenders—(1) It was not proved that the pursuer's father was ever divested of all share in the Cowgate business, It was proved that no notice of any change was sent to the defenders. (2)

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Apart from that, the pursuer's father was prœposittis negotiis, and the defenders were entitled to presume his authority to receive payments and grant receipts, and to transact business generally. In the circumstances they were entitled to act as they did. When the father came and stated the difficulty with regard to the crossed cheque nothing was disclosed to them which laid upon them any duty of inquiry. Apart from the general rules as to presumed authority which would have been sufficient to cover such a case, here the defenders were dealing with one of the Gemmells from the shop in Cowgate, and indeed the member of the family with whom they had originally and chiefly done business, and were abundantly justified in acting as they did. The pursuer had himself to blame, for he might have stopped payment of the defenders' cheque, and so warned them against dealing with his father.