Scottish Court of Session Decisions

This was an appeal from a decree pronounced in the Sheriff Court of Perth against two out of three bankrupt defenders in an action of damages in respect of their failure to obtemper an order of the Court to find caution for expenses.

In 1899 Robert Crichton and David Gentle Crichton, traction-engine and threshingmachine owners, Burrelton, near Coupar-Angus, in an action at their instance in the Court of Session against Mrs Margaret West or Crichton their mother, John Crichton and James Crichton their brothers, and others, obtained decree of declarator that the pursuers were the sole partners of the firm of Crichton Brothers, traction-engine and threshing-machine owners, Burrelton. There was also in that action a conclusion for £1000 damages, which, however, was not insisted in, and was accordingly dismissed.

In November 1901 Robert Crichton and David Gentle Crichton, as sole partners of the firm of Crichton Brothers, raised the present action in the Sheriff Court at Perth against Mrs Crichton, High Street, Burrelton, John Crichton, saw miller, Burrelton, and James Crichton, engineman there, jointly and severally or severally, for a sum of £2000 damages for loss alleged to have been sustained by reason of certain illegal acts and intromissions on the part of the defenders with the machinery and business of the pursuers' firm.

The pursuers averred—‘(Cond. 12) Notwithstanding the said action in the Court of Session and protests made by the pursuers prior to the raising thereof, the defenders at and prior to May 1899, and down to the final decision in said action, represented and continued to represent to the public that the pursuers were not the partners of Crichton Brothers. They held themselves out as the sole partners, or as at least in sole right of the business and assets of said firm. They falsely represented to the authorities of the Post Office that all letters addressed to ‘Crichton Brothers’ ought to be delivered to them. They thus wrongously obtained possession of several such letters. In consequence of a representation by pursuers these authorities ceased to deliver such letters to defenders, but in consequence of defenders' said misrepresentations they also refused to deliver these letters to the pursuers, who thus suffered much damage in the conduct of their business. They also issued circulars throughout the country, and particularly among the customers of Crichton Brothers, purporting to be signed by Crichton Brothers, instructing that all orders should be sent to the defender Mrs Crichton, and intimating that any parties making payments to the pursuer Robert Crichton would be held liable in second payment. A copy of said circular is herewith produced. It was issued without the knowledge or authority of the pursuers or any of them. Authority was not given by the pursuers or any of them to the defenders or to any of them to append the firm name of Crichton Brothers to said circular, which was altogether false and calculated and intended to mislead the public. It is believed and averred that the defenders offered for and obtained contracts and took on orders in the name of and as representing themselves to be Crichton Brothers. In consequence of the said misrepresentations by the defenders the pursuers' business has suffered and will suffer great loss and damage, for which the defenders are responsible.”

Defences were lodged in this action for Mrs Crichton, and joint defences were lodged for John Crichton and James Crichton.

The pursuers pleaded—“The pursuers having suffered damage to at least the extent sued for through the illegal acts and conduct of the defenders, decree as craved ought to be granted, with expenses.”

The defender Mrs Crichton pleaded—“(1) The pursuers' averments are irrelevant to support the conclusions of the action. (2) The pursuers' averments, so far as material, being unfounded in fact, the defender is

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entitled to absolvitor, with expenses. (3) Any loss or damage suffered by the pursuers not having been caused or contributed to by this defender, she is entitled to absolvitor. (4) The present action is barred by the proceedings in the Court of Session action. (5) In any event the sum sued for is excessive.”

The pleas-in-law for the defenders John Crichton and James Crichton were in exactly similar terms, except that they omitted the third plea, quoted above, this plea being stated by Mrs Crichton only.

While the action was pending the defender Mrs Crichton became bankrupt, and a trustee was appointed on her sequestrated estate. The defenders John Crichton and James Crichton were also sequestrated, and a trustee was appointed on their estates.

After intimation of the action to him Mrs Crichton's trustee sisted himself as a party thereto.

The action was intimated to the trustee on the estates of John Crichton and James Crichton, but in respect that he failed to sist himself as a party to the cause the Sheriff-Substitute ( Sym) on 6th May 1902 ordained these defenders to find caution for the expenses of process.

Note.—“Though the matter of ordaining a party to find caution for expenses be a question of discretion, there is a general rule that a defender ought not to be ordained to find caution for expenses. In this case it is thought that the discretion ought to be exercised to the effect of finding the defenders bound to find caution. The pleadings and the documents to which reference is therein made show that the defenders have been found in the Court of Session to have wrongly maintained that they were the partners of a certain firm, and that to the total exclusion of the persons who were truly the partners and the owners of the firm's assets, and that in maintaining this position they interfered with the assets. This action is to recover the loss which the true partners so suffered. The defenders' trustee has considered the matter and seen no reason for defending, and the Sheriff-Substitute thinks that there is no real legitimate interest in the bankrupts to insist in the defence.”

On 30th May 1902 the Sheriff-Substitute pronounced an interlocutor in the following terms:—“The Sheriff-Substitute, on the motion of the pursuers, and in respect the defenders John Crichton and James Crichton have failed to obtemper the order of Court to find caution for expenses of date 6th May current: Decerns against them conjunctly and severally in terms of the prayer of the petition,” &c.

On appeal the Sheriff ( Jameson) on 4th August 1902 affirmed the Sheriff-Substitute's interlocutors of 6th and 30th May.

Note.—“I agree with the observations in the Sheriff-Substitute's note to the interlocutor of 6th May. So far as the pecuniary interest in this action is concerned the bankrupts are represented by their trustee, but he has not taken the opportunity afforded him of sisting himself as a party to the cause, The bankrupts John and James Crichton have no interest to serve in the way of clearing their characters or otherwise, by continuing to defend the present action, and in the circumstances it seems to be of very little moment whether the sum decerned for is for a greater or lesser amount. It was urged that it might affect their discharge, but I cannot believe that this will be so, as it will be brought before the Judge who has to discuss the question of discharge, that the sum for which decree has passed against them in this action was a slump sum of damages, and in a different position from an ordinary trading debt incurred by them.”

The defenders John Crichton and James Crichton appealed to the Second Division of the Court of Session, and argued—If the conclusion for damages in the Court of Session action had been insisted in, these defenders would then have been able to resist it without finding caution, and it would be unjust that they should suffer any disadvantage by the pursuers' delay in pressing their claim. The bankrupts were especially interested to resist the placing of a liability for £2000 over their heads, as such a liability would seriously affect their prospects of discharge. The Sheriff was therefore wrong in supposing that they had no interest to defend the action. Mrs Crichton's trustee having sisted himself the defence would be maintained, and no additional expense would be incurred if the appellants were allowed to remain in the action, as no separate representation was necessary on their behalf. If the pursuers were unsuccessful, they could only be found liable in the expenses of one defence.

Argued for the respondents—It could not be said that there was only one defence. The defender Mrs Crichton did not identify herself with the appellants; against her the respondents might fail while they succeeded against the other defenders, who therefore were not entitled to continue their defence without finding caution for expenses.