Scottish Court of Session Decisions

The first of these actions was an action of multiplepoinding, in which Connal & Company, Limited, storekeepers, Glasgow, and the National Bank of Scotland Limited were pursuers and nominal raisers, and (1) Robert Reid, C.A., Glasgow, trustee on the sequestrated estates of M'Dowall & Neilson, timber merchants, Glasgow, and (2) Hagart & Company, timber measurers, Glasgow, were defenders, Robert Reid being also real raiser; and in which the fund in medio consisted of certain lots of timber lying in Connal & Company's yards, and certain sums contained in certain deposit-receipts issued by the National Bank of Scotland in favour of Hagart & Company and Robert Reid.

The second action was also an action of multiplepoinding in which the parties were the same as in the first except for the fact that the Clyde Navigation Trustees took the place of Connal & Company and that the fund in medio consisted of certain other lots of timber lying in they ards of the Clyde Navigation Trustees, and certain other deposit receipts granted by the National Bank of Scotland in favour of the sam eparties. Thecircumstances, the pleadings, and the interlocutors in both cases were otherwiseid dentical.

The facts are set forth in the opinion of the Lord Ordinary in the case of Connal &Co., infra.The agreement referred to by the Lord Ordinary in his opinion, and by the defenders in plea 4, was contained in these condand third of the letters which follow:—

1. Letter, Connal & Co., Ltd., to Robert

Reid, dated 7th October 1903.

“ M'Dowall & Neilson's Sequestration.

Reid v. Hagart & Company.

“Adverting to the writer's interviews with Mr Donaldson and Mr Reid, we have now to state that our clients are prepared to allow the timber to be sold on the following conditions:—1. The salesman to be Mr Cant, and he is to be instructed to sell by private bargain at the best prices in the market—not hurriedly, but in the usual course of his business. 2. In all questions of law or procedure at law the money proceeds of the sale are to be held as in the custody and possession of Hagart & Co., just as the timber is, and it is to be subject to their liens and claims of every description in the same manner as the timber. 3. Generally, Messrs Hagart & Co's, position is not to be prejudiced in any way by their parting with the timber and allowing it to be sold, and the trustee is not to be at liberty to base any plea on the sale in derogation of our clients' right. On the other hand, the trustee's pleas in the action now pending before the Court are not to be prejudiced either, but will be reserved by him entire. 4. Subject to above reservation of the pleas and rights of both parties, the proceeds of sale are to be consigned in the National Bank of Scotland, St. Vincent Street, Glasgow, in name of Hagart & Co. and of Mr Reid, to await the final issue of the legal proceedings.”

3. Letter, Reid's Agents to Hagart &Co's. Agents, dated 29th January 1904.

M'Dowall & Neilson's Sequestration.

Reid v. Hagart & Co.

“We have now had an opportunity of submitting to the trustee and commissioners your letter to us of 22nd curt., but they, like ourselves, do not quite understand conditions 2, 3, and 4, as expressed by you. They are willing that the timber should be sold by Mr Cant by private bargain at the best prices he can obtain in the usual course of his business, such sale to be under reservation of the rights and pleas of both parties, and the proceeds of sale to be consigned in bank in joint names of your clients and the trustee to await the issue of the legal proceedings, such proceeds to be held as a surrogatum for the timber.”

The defenders, Hagart & Co., pleaded, inter alia—“(2) There being no double distress, the

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action is incompetent and should be dismissed. (4) The real raiser is not entitled to bring the present action ( a) in respect it is a breach of the agreement above set forth, and ( b) the defenders have, on the faith of said agreement, parted with the possession of the said goods and allowed the same to be sold. (5) Under the terms of said agreement the alleged fund in medio is, in a question with the real raiser, in the custody and possession of the defenders. (6) There being no competing claims to the property in the fund in medio the action is incompetent.”

On 20th June 1905 the Lord Ordinary (Low) pronounced the following interlocutor in both actions:—“Repels the defences for the appearing defenders, and decerns: Appoints the cause to be enrolled for further procedure, and grants leave to reclaim: Finds the said defenders liable in expenses from the date of the calling of the summons herein to the date hereof.”

Opinion.—“The circumstances under which this action of multiplepoinding was brought are these.

Certain lots of timber belonging to the bankrupt firm of M'Dowall & Neilson were stored in the timber yards of the pursuers and nominal raisers, Connal & Company. The defenders Hagart & Company are timber measurers, who acted for M'Dowall & Neilson in measuring the timber and storing it in Connal & Company's yards. M'Dowall & Neilson were due to Hagart & Company certain fees and charges for the services which they had rendered, and it appears that the latter had also made advances to the former. Shortly before their bankruptcy M'Dowall & Neilson granted delivery orders for the timber in favour of Hagart & Company. These orders appear to have been granted upon the assumption that the timber was truly in the custody of Hagart & Company, and not of Connal & Company. Upon the same assumption Mr Reid, M'Dowall & Neilson's trustee, brought an action against Hagart & Company for delivery of the timber. During the course of that action the parties came to an agreement (which I shall presently refer to more particularly) that the timber should be sold by a gentleman named, as opportunity offered, but that Hagart & Company's position should be in no way prejudiced by the sale of the timber. Ultimately Mr Reid abandoned the action, the reason alleged being that he discovered that the timber was not in the custody and possession of Hagart & Company but of Connal & Company.

Part of the timber was sold under the agreement to which I have referred, and the proceeds were deposited in the National Bank in the names of Hagart & Company and Mr Reid. These sums and the portion of the timber which has not been sold form the fund in medio.

In these circumstances Hagart &Company maintain that there is no double distress, and that an action of multiplepoinding is therefore incompetent. They pointed out that while Mr Reid claims the timber or its proceeds as being the property of the bankrupt firm, they claim only a right of retention in respect of the fees and charges and advances.

Now as regards the money deposited in bank I do not think that there is much substance in the distinction taken by Hagart & Company between the character of the two claims. Hagart & Company say that, although the timber was stored in Connal & Company's yard, it was under their control, and that they were therefore in a position to retain it, and were entitled to retain it against the debt due to them by M'Dowall & Neilson; that the money is in the same position as the timber; and that they have the same right to retain the money as they had to retain the timber which it represents. That may be quite true, but if a person is entitled to retain money belonging to another which is in his possession against a debt due by that other to him, that simply means that he is entitled to apply the money in payment of the debt so far as it will go. Therefore Hagart & Company's claim is, in substance, a claim for the deposited money just as much as Mr Reid's claim is.

That being the position of matters, I think that the case of Commercial Bank of Scotland v. Muir ( 25 R. 219) is an authority for holding that so far as the deposited money is concerned the action is competent. That was also a case where two parties had deposited money in bank in their joint names, and where one of them maintained that he had right to the whole of the fund, and the other that he had right to half of it. It was held by the First Division that the action was competent. Lord Adam said—‘There are two competing claimants to funds in the hands of a third party, and that, I think, is enough to make the action competent.' In like manner Lord Kinnear said-‘The substance of the matter is that there is a dispute as to the right of these two persons to the whole or part of this sum, and therefore there is, in my opinion, a sufficient competition to support the action of multiplepoinding.’

In so far as the fund in medio consists of the unsold portion of timber, I have more difficulty, but I think that it is substantially in the same position as the consigned money. It is admitted that the timber is stored in Connal & Company's yard, but Hagart & Company say that it was stored in their name and was under their control, and that they are entitled and are in a position to retain it as against Reid, first in respect of an agreement between them and the bankrupts that they should hold the timber in security of advances made to the latter, and, second, in respect of a lien which they allege over the timber in respect of their fees and charges. I think that that is a case of competing claims to the timber in Connal & Company's yard, and that it therefore falls within the rule laid down in Commercial Bank v. Muir. It is true that the question might have been determined in an action of declarator by Reid against Hagart & Company, but the same argument was rejected in the Commercial Bank case.

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Hagart & Company, however, further maintain that the action is entirely excluded by the agreement to which I have already referred, which was entered into during the course of the previous action at the instance of Reid v. Hagart & Company. The latter maintain that that was an agreement to the effect that the timber should in all questions between them and Reid be regarded and dealt with as being in their actual custody and possession, and that the proceeds of timber sold should be in the same position. They accordingly argue that the present action, in which Reid's claim is based on the assumption that the timber was never in the custody and possession of Hagart & Company, is barred by the agreement. Now the agreement was embodied in several letters, a portion of one of which only is quoted by the defenders in their answers. I have already said that the occasion of the agreement was that Reid had brought an action against Hagart & Company for delivery of the timber upon the footing that it was in the custody and possession of the latter, and the object of the agreement was to allow of the timber being realised to the best advantage without thereby prejudicing the position and right of Hagart & Company. I am of opinion that the letters, when read in the light of the circumstances in which they were written, constitute an agreement that the price of timber which might be sold should come in place of the timber, and that Hagart & Company should have the same rights in all respects to the price as they would have had to the timber if it had not been sold. But I cannot read the letters as being a contractual admission by Reid that the timber was in fact, or was in all questions between him and Hagart & Company, to be treated as being in the custody and possession of the latter.

I am therefore of opinion that the present action is not barred by the agreement.”

The defenders Hagart & Company reclaimed and argued—A multiplepoinding was not a competent form of process, there being here no fund in the hands of a third party as to which two other parties were in dispute. The timber was to all purposes in their own custody. That was distinctly recognised in the agreement (Sect. 2), and, apart from the agreement, Connal & Company's letter of 7th October 1903 showed that Connal & Company held the timber solely for them, and were under no obligation to anyone else. There was therefore no stakeholder, and the essential object of a multiplepoinding was the exoneration of a stakeholder. The money— vide the agreement—was in exactly the same position as the timber. Reid should therefore have raised a direct action against them. Commercial Bank of Scotland v. Muir, December 1, 1897, 25 R. 219, 35 S.L.R. 174, founded on by the respondent, was not to be extended, and Connal v. Ferguson, February 19, 1857, 19 D. 482, dealt only with trust funds, and there was no argument as to competency. The present case was analogous rather to Russel v. Johnston, June 1, 1859, 21 D. 886; Clark v. Campbell, December 12, 1873, 1 R. 281, 11 S.L.R. 138; Royal Bank of Scotland v. Ellis, 10 S.L.T. 167. The practical objection to a multiplepoinding was that they would, even if successful, be subjected to the real and nominal raiser's expenses—Hepburn's Trustee v. Rex, July 17, 1894, 21 R 1024.

Argued for the respondent Reid—The action was competent, there being no competing claims to timber and money in hands of third parties— Connell v. Ferguson; Commercial Bank of Scotland v. Muir ( cit. sup.). The timber was de facto in the hands of a third party, Connal & Company, and the agreement, justly construed, meant only that the proceeds of such portions as might be sold were to be in the same position as the timber had been. It was not an agreement that the timber was in Hagart & Company's possession. If, however, it turned out on the litigation upon its merits that he was wrong, he was willing to pay the nominal raiser's expenses, and to forego his claim to his expenses as real raiser out of the fund.