Scottish Court of Session Decisions

The Justices of the Peace Small Debt (Scotland) Act 1825 provides, sec. 14—“The decree given by the said justices in any case competent to them by this Act shall not be subject to advocation, nor to any suspension, appeal, or other stay of execution, excepting only in the case of consignation, as hereinbefore provided for the purpose of a rehearing before the justices, nor shall he set aside or altered in an action of reduction before the Court of Session on any other ground except that of malice and oppression on the part of the justices, nor shall any such action of reduction be at all competent after the expiration of one year from the date of the decree of the justices.”

Section 15 provides that in case of a reduction being brought on the ground of malice and oppression the pursuer must find sufficient caution.

Andrew Robertson was under section 2 of the Moneylenders Act 1900 (63 and 64 Vict. cap. 51) registered as carrying on business as a moneylender at 429 Lawnmarket, Edinburgh, under the name of the “Exchange Loan Company” (without the addition of the word “Limited”). On 13th February 1904 he advanced a sum of money to Manuel Wolfe and two others, who in return accepted a bill in the following terms :—

“Edinburgh, 13th February 1904. “£3, 0s. Od.

One day after date pay to us or our order, within our office at 429 Lawnmarket here, the sum of three pounds sterling, for value received.

To Freda Funk, broker,

South Richmond Street, Edinburgh.

Walter Funk, broker, 2 Pleasance,

Edinburgh.

Manuel Wolfe, rag merchant, 13 Richmond Place, Edinburgh.”

Being unable to get payment of his advance, Robertson, under the name of the Exchange Loan Company, Limited, brought an action against Wolfe and the other two debtors in the Justice of Peace Small Debt Court, Edinburgh. When the case was called in Court the two other debtors allowed decree in absence to go out against them. Wolfe was present in Court and consented to decree and took no objection to the instance of the action. Decree was accordingly given on 31st October 1904, finding the defenders liable to the “above designed Exchange Loan Company, Limited, pursuers, in the sum of three pounds ten shillings with six shillings and seven pence of expenses,” and decerning and ordaining “instant execution of arrestment, and also execution to pass hereon by poinding after a charge of ten free days.” Throughout the whole transactions there was no doubt that Wolfe knew that Robertson was really the person with whom he was dealing, and that the Exchange Loan Company, Limited, was simply a business name assumed by him. On the 15th of June Robertson executed a poinding of Wolfe's effects under the above decree. After the poinding was partially executed Wolfe paid £2 to account

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of the amount in the decree, taking no objection either to the decree or the diligence which had followed upon it. Subsequently, however, he brought a note of suspension and interdict in the Court of Session against Robertson, in which he sought to interdict “the respondent and all others from proceeding in any manner of way with any diligence whatever against the complainer upon or in virtue of an alleged or pretended decree obtained at the instance of a pretended company styled the Exchange Loan Company, Limited, 429 Lawnmarket, Edinburgh, against the complainer.”

In his averments he stated—“(Stat. 2) There is no such company as ‘The Exchange Loan Company, Limited,’ nor has there ever been such, and the complainer is not indebted in any way to any such company. Although the said pretended company is non-existent and fictitious, yet the respondent is executing the said decree with the view of putting the money which is said to be the property of said nonexistent company into his own pocket. He has already extorted a sum of £2 from the complainer, which he has appropriated to his own uses.”

He pleaded—“(1) The pretended decree in question being at the instance of a nonexistent pursuer, and the respondent having illegally and unwarrantably threatened, and still threatening, to put the said decree into force without lawful authority, interdict should be granted as craved, with expenses.”

Subsequently, when the case was before the Inner House, the complainer added an amendment, in which he stated that he had ascertained and averred that there was already an “Exchange Loan Company, Limited,” registered under the Companies Acts, and carrying on business in England.

Simultaneously with the note of suspension and interdict Wolfe brought an action against Robertson in the Court of Session in which he sued him for the sum of £250 as damages for wrongful and illegal poinding.

In his answers the defender stated, inter alia—“Admitted that in raising and following forth said action under which said decree was pronounced, the defender represented ‘The. Exchange Loan Company, Limited.”’ In the Inner House he added the following amendment:—“The defender is registered under the Moneylenders Act 1900 under the name ‘The Exchange Loan Company,’ of which company he is the sole partner. The addition of the word ‘Limited’ to the name of said company was made by the defender in the bona fide belief that he was entitled to do so. Throughout the transactions condescended on, the pursuer was well aware that the defender was really the person with whom he was dealing, and that the Exchange Loan Company, Limited, was simply a business name assumed by him.”

The defender pleaded in the action for damages, inter alia—“(1) The action is incompetent and untenable in respect that the small debt summons, decree, and warrant following thereon, are ex facie regular and valid, and are not liable to be challenged or set aside in the present action. (2) The pursuer's statements are irrelevant and insufficient to support the conclusions of the summons. (4) The decree libelled on, and the whole proceedings following thereon, having been legal and regular, can afford no ground for damages against the defender.”

On 19th January 1906 the Lord Ordinary ( johnston) pronounced (1) an interlocutor in tiie note of suspension and interdict granting the interdict craved; (2) an interlocutor in the action for damages repelling the first, second, and fourth pleas-in-law for the defender, and assigning a day for the adjustment of issues.

Opinion.—“ There are here two actions arising out of the same circumstances—a suspension and an action of damages. They must I think be separately considered. And the suspension is first in order.

“It is a suspension, or rather a suspension and interdict, against any diligence proceeding against the complainer in virtue of a certain Justice of Peace Small Debt decree, of date 31st October 1904. It is not a suspension of the decree itself. The decree proceeds on a small debt summons at the instance of the Exchange Loan Comany, Limited, 429 Lawnmarket, Edinburgh, against Freda Funk, Walter Funk, and Manuel Wolfe, the latter being the only complainer, and on the summons decree went out against the defenders for £3, 10s. and 6s. 7d. of expenses, and containing the usual warrant to poind after a charge of ten days. The action proceeded on a bill for £3, all as set forth in the account annexed to the summons. There is no objection to the regularity of the procedure.

The person against whom the suspension and interdict is brought is a certain Andrew Robertson, moneylender, 429 Lawnmarket, Edinburgh, and the ground of susension is that there is not, and never has been, any such company as the ‘Exchange Loan Company, Limited,’ that the company is non-existent and fictitious, that the complainer is not indebted to such company, that in suing the complainer along with the two Funks, and obtaining decree against them, the respondent made use of the name of this fictitious company, and that he is now using the decree so obtained for his own behoof.

I read the defences as an admission that there is no such limited company as the ‘Exchange Loan Company, Limited.’ The defender was bound, on the complainer's challenge, to give specific information as to its constitution and registration, and I do not understand the averment that the respondent responted the ‘Exchange Loan Company, limited,’ as anything but an admission that he illegally used the name of a fictitious limited company to represent himself in a transaction in which he was really principal, and in the action which he raised upon it.

“The decree itself is protected under the Justice of Peace Small Debt Act 1825 (6

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Geo. IV, cap. 48), section 14. Except under the provision for re-hearing there is no possibility of review except by reduction, and reduction must be brought within a year from the date of the decree, and can proceed only on the ground of malice and oppression on the part of the justices. It was open to the complainer when cited, or on an application for re-hearing, to take an objection to the instance—in fact, a double objection, viz.—(1) That a descriptive firm cannot sue without the addition of three of its partners, or the whole if less than three— Antermony Coal Company, 4 Macph. 1017, per Lord President Colonsay; and (2) that the Exchange Loan Company, Limited was non-existent and fictitious. But the opportunity passed, and whether any other remedy is open, review under the statute cannot now be had, and the decree must stand for what it is worth— Bell v. Gunn, 21 D. 1009, and similar authorities.

“The question remains whether, standing the decree, the complainer has any remedy. The Act, section 14, supra cit., says that the decree shall not be subject to advocation, &c., ‘or any other stay of execution.’ But I do not think that that stands in the way of the relief sought. It is true that the Court refused to interfere with diligence proceeding where a trifling and innocent mistake had been made in the Christian name of a defender in a small debt summons dummodo constabat de persona (Spalding v. Valentine & Company, 10 R. 1092), but cf. the second part of Gray v. Smart, 19 R. 692. But here there has been no innocent mistake. An act has been committed which the Court will utterly discountenance, viz., the unauthorised assumption of the style of a limited company. I cannot find that there is any penalty imposed by the Companies Acts on such assumption, but it is nevertheless a fraud on these Acts, and may well be an element in fraud at common law. But one thing is certain, that at any step the Court will stop an individual using the name of such a fictitious limited company. The decree may stand. I may not be able to suspend diligence upon it by the company in whose name it proceeds. But as there is no such company that is immaterial. But the statute puts no obstacle in my way in stopping the use by an individual of the decree which he has obtained in the name of a fictitious company. The decree is not his warrant, and he has no right to use it, though he has deceived the justices into granting it.

I shall therefore make the interdict perpetual, with expenses.

In the matter of the action for damages for wrongful and illegal poinding in the circumstances above narrated there are certain preliminary pleas which require to be considered.…

[His Lordship discussed pleas 1, 2, and 4 for the defender.]

I shall therefore repel the 1st, 2nd, and 4th pleas for the defender, and appoint issues to be lodged, reserving to hear the arties as to whether the case should not be sent to proof.”

Robertson reclaimed in both actions.

Argued for the appellant—The respondent's case was without substantial foundation; admittedly he was the appellant's debtor, and admittedly it was really the appellant who had poinded his effects, so that there was no room for the suggestion that any injustice had been done or was going to be done to the respondent. Undoubtedly, however, the instance in the small debt action was technically bad, and if timeous objection had been taken the action would have been dismissed. But the decree was now unchallengeable—Small Debt Act 1825, sections 14 and 15; Bell v. Gunn, June 21,1859, 21 D. 1008—and further, the diligence authorised by the decree was also unchallengeable, there being no distinction under the Small Debt Acts between a suspension of the decree itself and of the diligence following it—Act of 1825, section 14; Wilson v. Scott, November 21, 1890, 18 R. 233, 28 S.L.R. 127; cf. also Graham v. Findlay, February 22, 1845, 7 D. 515. Diligence could therefore be done by the respondent as representing the Exchange Loan Company, Limited, and it was absurd to say that the addition of the word “Limited” affected the question; it was a mere nominal misdescription, which was a matter of no moment— Spalding v. Valentine & Company, July 4, 1883, 10 R. 1092, 20 S.L.R. 724; Turnbull v. Russell, November 15, 1851, 14 D. 45; Keene v. Aitken, February 15, 1875, 12 S.L.R. 308. On the assumption, however, that the Exchange Loan Company, Limited, was a fictitious person the bill fell to be treated as payable to bearer, and the respondent as such could do diligence on it—Bills of Exchange Act 1882, section 7 (3); Bank of England v. Vagliano Brothers, (1891) AC 107. As to the action of damages, no damage had been suffered, but the decree being unchallengeable damages could not be awarded against a party who had proceeded under it — Crombie v.M'Ewan, January 17, 1861, 23 D. 333.

Argued for the respondent —The Lord Ordinary's view that this was a fraud against the Companies Acts was a sound one. The Court would do nothing to further such a fraud. If there was a real company in existence known as the “Exchange Loan Company, Limited,” it alone could proceed upon the decree; if there was not, clearly the appellant could not avail himself of the fiction. The cases cited by the appellant were all cases of mere error in description. This was an error in persona, and therefore in essentialibus. He referred to Brown v. Rodger and Another, December 13, 1884, 22 S.L.R. 225; Kerr on Fraud and Mistake, 300.