Scottish Court of Session Decisions

This was an action brought in the Sheriff Court at Dundee by Crawford Finlay, Dundee, against the Hon. Edward Lyulph Stanley and others, the trustees and officebearers of the Royal Liver Friendly Society, in which the pursuer craved decree, inter alia, (1) for payment of £100 in name of damages on account of his having been illegally dismissed from the office of collector of the Society, and on account of his having been illegally deprived of his collecting book.

The pursuer averred that on 6th February 1899 he had been appointed by the committee of management to be a collector of the Society, in pursuance of an agreement between him and one Towns, a retiring collector, whereby the pursuer had agreed to pay Towns the sum of £40 for nominating the pursuer as his successor; that he thereupon took over Town's collecting-book and acted as collector down to 3rd May 1900, when he was suspended by the committee of management. He averred that he had faithfully discharged his duties as collector, and had maintained the average amount of payments due by policy-holders which it was his duty to collect. He averred further that on said 3rd May 1900 he was suspended by the committee of management without any reason being assigned therefor, and deprived of his collecting-book; that he was on 17th May 1900 called upon to state what reasons he had to give why he should not be discharged from the Society's employment; that he thereupon requested information of the complaints made against him, and at the same time offered to resign provided the Society would accept his nominee as his successor; that on 24th May 1900 he nominated as his successor one Wilson, who had agreed to pay him a certain sum in the event of his nomination being accepted, but that the Society refused to sanction the said nomination, and also refused to receive any other nomination from the pursuer; and that on 29th May 1900 the committee of management discharged him from his office of collector. He averred that he had never been guilty of dishonesty or wilful disobedience of orders, nor of any conduct which might be calculated in the opinion of the committee of management to be injurious to the interests of the Society, and further, that no charge of such conduct had ever been made against him by the committee. The pursuer estimated his loss of commission, &c., at £1 per week, and the value of his collecting-book at £40.

The defenders, in answer, admitted that they had suspended and finally discharged the pursuer, and explained that they had for a long time previously been dissatisfied with his conduct, and had warned him of the fact. They averred that the reason of his suspension, which was communicated to him at the time, was “his neglect of business and conduct calculated in the opinion of the committee to be prejudicial to the interests of the Society.”

The defenders founded upon the terms of the pursuer's appointment, which bore that he was “to be subject in all respects to the present or any future rules of the Society and upon their rules 29 and 31, which were in these terms—Rule 29,” The Society may have an unlimited number of collectors in the United Kingdom and elsewhere, to be appointed in writing by the committee of management, who shall remain in office so long as their conduct is satisfactory to the committee, subject to the following provisions:—That no collector holding a collecting book or books, and receiving for his own use the commission, en trance fees, and other emoluments incidental to such holding, shall be deprived of such book or books except for dishonesty, wilful disobedience of orders, or conduct calculated in the opinion of the committee of management to be injurious to the interests of the Society, and (subject to the approval of the committee of management) he shall be at liberty to nominate as his successor any other person who shall, in the opinion of the committee of management, be eligible for such position, and after approval of such nominee by the committee, such book or books shall be handed over to such nominee, and the collector so

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retiring shall be entitled to receive from such nominee for his own use such premium or benefit for such nomination as he shall think fit: Provided that this privilege now accorded to the collectors of the Society shall in no way interfere with the full power and absolute discretion of the committee of management to conduct the affairs of the Society in such manner as they deem expedient for the interests of the Society: Provided also that no property in any collecting-book shall be acquired by any collector, but the property therein shall be vested in the trustees for the time being of the Society.” Rule 31—Should any person feel aggrieved at the decision of the committee of management with regard to his suspension or discharge as … collector or other officer of the Society, or as to any matters affecting his interest as such … collector or other officer, such person shall have the right of appealing to the next available annual or special meeting of delegates by giving twenty-one days' written notice of his intention to do so addressed to the committee of management.” …

The pursuer pleaded—“(1) Pursuer having been deprived of his collecting-book by the Society without his having been guilty of dishonesty, wilful disobedience of orders, or conduct injurious to the interests of the Society, is entitled to decree for the sum in the first place craved in lieu of commissions and other emoluments or in name of damages. (2) Pursuer having, contrary to the rules of the Society and to his agreement of service with the Society, been dismissed from his office as collector without having had any charges made against him, and without having had the opportunity of replying to any such charges, is entitled to decree for the sum in the first place craved in lieu of commissions and emoluments or in name of damages. (3) The defenders having refused to receive a nomination by pursuer in terms of the rules of the Society of a person to act as his successor, and having without such nomination and without consent of pursuer appointed another person as pursuer's successor, pursuer is entitled to decree for the sum in the first place craved in name of damages.”

The defenders pleaded—“(2) The pursuer's appointment being subject to the rules of the Society, and the said rules providing a special appeal to persons aggrieved at the decision of the committee of management with regard to their suspension or discharge, the present action is incompetent. (3) The said rules providing that collectors shall remain in office only so long as their conduct is satisfactory to the committee of management, and the said committee having been satisfied that the pursuer was guilty of neglect of business and conduct calculated in their opinion to be prejudicial to the interests of the Society, the committee were entitled to dismiss the pursuer. (5) The committee of management having in terms of rule 29 an absolute discretion to withhold the privilege of nomination of a successor, and having done so in the present case, the pursuer has no ground of action in respect thereof.”

The Friendly Societies Act 1896 by section 68 (1) [which by rule 3 of their rules applies to the defenders' Society] provides that every dispute between an officer of any registered branch and the society “shall be decided in manner directed by the rules of the society or branch, and the decision so given shall be binding and conclusive on all parties without appeal, and shall not be removable into any court of law.”

The Sheriff-Substitute ( Campbell Smith) before answer allowed a proof, to which for the purpose of this report it is unnecessary to refer.

On 26th February 1901 the Sheriff-Substitute pronounced an interlocutor whereby he found, inter alia, that the defenders had wrongfully and in breach of their contract with the pursuer refused to accept his nomination of the purchaser of his collecting book, and decerned against them for £27, 4s. in name of damages.

The defenders appealed to the Court of Session, and argued—The Sheriff had no jurisdiction. Section 68 of the Friendly Societies Act 1896 provided that all disputes between a Friendly Society and its officers should be decided in the manner directed by the rules of the Society without appeal. Rule 31 of the Society gave a right of appeal to the delegates of the Society, and accordingly the pursuer was restricted to that remedy. In any view, the pursuer had set forth no relevant grounds for claiming damages. He had been dismissed and deprived of his collecting book for conduct calculated in the opinion of the committee of management to be injurious to the interests of the Society, and the committee were the sole judges of such a question. Even if a collector who had been dismissed had a right to nominate a successor, which the defenders denied, that right was subject to the approval of the Society; and if they disapproved of the nominee, as they did, they were not bound to allow the pursuer to nominate another. In any view, the pursuer had no right of property in his collecting book, which belonged to the Society (rule 29.)

Argued for the pursuer and respondent—(1) The pursuer's case was, that the defenders had acted contrary to the rules of the Society in the matter of his dismissal, and also in depriving him of his right to nominate a successor; and if that were so the Court had jurisdiction— M'Kernan v. Greenock Lodge of United Operative Masons of Scotland, March 19, 1873, 11 Macph. 548, 10 S.L.R. 261. The fact that the pursuer had been dismissed did not deprive him of his right to nominate a successor, and if the defenders did not approve of the person first nominated they were bound to allow him to nominate another. The pursuer maintained, further, that he had been dismissed illegally, in respect that the defenders had given him no opportunity of replying to the charges made against him.