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Thomas Hayman & Sons v. The American Cotton Oil Co. and Others [1907] ScotLR 207 (29 November 1907)
URL: http://www.bailii.org/scot/cases/ScotCS/1907/45SLR0207.html Cite as:
[1907] ScotLR 207,
[1907] SLR 207
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SCOTTISH_SLR_Court_of_Session
Page: 207↓
Court of Session Inner House Second Division.
[Sheriff Court at Glasgow.
Friday,
November29.
1907.
45 SLR 207
Thomas Hayman & Sons
v.
The American Cotton Oil Company and Others.
Subject_1Principal and Agent Subject_2Holding Out Subject_3Public Representation of Party as Agent Subject_4Private Arrangement Qualifying it — Right of Member of Public.
Principal and Agent — Agent Acting as Principal in a Particular Transaction — Fraud of Agent — Liability of Principal.
Facts:
A & Company, a firm of oil merchants in America, by advertisements in newspapers and letters addressed to a number of prospective customers, represented M'N. & Company, a firm in Glasgow, to be the exclusive agents for the sale of their products in Great Britain.
Held that, in a question with a member of the general public, A & Company were precluded from maintaining that M'N. & Company were not their agents in the ordinary meaning of the term, with the ordinary power of binding their principals, but were only agents in the special and limited sense of being a distributing channel,
i.e., the persons in Great Britain entitled as principals to buy and then sell the goods of A & Company.
B, the sole partner of M'N. & Company, who were agents for A & Company, met C, who knew of the agency, and pressed him to buy a quantity of A & Company's oil, cheap, at 1s. per cwt. below the market price (a rising one), indicating that he personally was “hard up” and “badly wanting money.” C accepted the offer and paid the price, but did not obtain the oil, M'N. & Company having become bankrupt and delivery having been stopped. In an action of multiplepoinding (in which in his evidence C admitted that the personal embarrassment of B would not have entitled him as an agent to sell at a cheap price),
held that C had in fact bought from B, and that B had sold as a principal and not as A & Company's agent, and that accordingly C had no ground upon which he could claim the oil from
A & Company.
Opinion that, even had the transaction taken place on the footing that B was acting as A & Company's agent, A & Company would not have been bound, in view of the further fact that B had committed a fraud to which A & Company were not parties, and by which they were not benefited, having represented for his own purposes, falsely, that the sale was a “spot” sale,
i.e., a sale of goods of which he could give immediate delivery, whereas in fact he had not possession of the goods, which were still the property of A & Company, and could not obtain it from the shipping company in whose custody the goods were until he had paid the price and freight, which he could not do.
Headnote:
Thomas Hayman & Son, storekeepers, Glasgow, raised an action of multiplepoinding in the Sheriff Court at Glasgow against (first) the trustee on the sequestrated estates of John M'Nairn & Company; (second) the American Cotton Oil Company, New York; (third) the International Banking Corporation, London; and (fourth) Ferguson, Shaw, & Sons, oil merchants, Glasgow.
The fund
in medio consisted of two lots of 50 barrels each of oil lying in the hands of the pursuers, and which had been claimed by the American Oil Company and John M'Nairn & Company.
A proof was taken by the Sheriff-Substitute (
Boyd), the result of which, along with the contentions of the various parties, appears from the following passages taken from the notes appended to his interlocutors (with which are incorporated the more important of the documents to which he refers)—“The question really arises between the American Cotton Oil Company and Ferguson, Shaw, & Sons. The latter bought from M'Nairn & Company 50 barrels X 2, and 50 barrels Y 2 of cotton oil and paid for them before delivery. M'Nairn & Company became bankrupt and delivery was stopped. The American Cotton Oil Company, from whom M'Nairn & Company had received the goods, claimed them on the ground that the property had never passed from them to M'Nairn & Company. Ferguson, Shaw, & Sons maintain that they bought from M'Nairn & Company as agents for the American Cotton Oil Company.… The claimants the American Cotton Oil Company claim as unpaid vendors. The claimants Ferguson, Shaw, & Sons claim as purchasers from John M'Nairn & Company, who they allege acted as agents for the American Cotton Oil Company. The question is whether M'Nairn & Company sold the oil to Ferguson, Shaw, & Sons as a merchant or as agents who bound their principals the American Company. It is admitted that M'Nairn & Company were appointed exclusive agents in Scotland, and later in the United Kingdom, for the American Cotton Oil Company, and the terms of the appointment appear from letters of the 12th April 1898, 14th August 1900, 29th August 1900, and 5th October 1900.”
The letter of 12th April was in the following terms—“We also confirm our telegram of yesterday, copy of which is enclosed herewith, to the effect that we had decided to appoint you our exclusive agents for Scotland under terms of the memorandum of agreement as proposed at the time of your Mr Stephenson's visit to New York. This morning your acknowledgment of the appointment reached us safely.
Terms of Agency.
“
Commission—1 per cent. on gross invoice (c.i.f. price); commission to be deducted from foot of each invoice.
Page: 208↓
Terms of Payment—By 60 days' sight draft, documents for payment on Messrs John M'Nairn & Company, payable in London.
Insurance—At 10 per cent. over gross invoice value.
Expenses—Each side stands own expense of cabling, postage, &c.
Shipment—Prompt shipment understood to be fourteen days.
It is understood that we appoint you our exclusive agents for the sale of our cotton-seed oils for Scotland, and that you, on your part, represent us exclusively in the sale of cotton-seed oils in your territory.
We are sending you by this mail copy No. 14 of our foreign cipher code for use between us, and which we will ask you to acknowledge upon receipt.
We are also having made up a case of samples of the different grades of oil likely to be used in Scotland, and which will go forward by first direct steamer. These samples are put up in
12 gallon tins as follows:—
Yellow—Grade No. 1—‘Union’ or ‘Aldige’ choice butter. 19s. per cwt.…
These we quote approximately at prices set opposite each brand, but of course these prices are subject to fluctuation, and we would expect to have cable inquiry for firm c.i.f. prices when business starts.
We have written both Mr Houston and Mr Geddes by this mail, advising them of your appointment, which we have informed them goes into effect immediately.
It is likely, however, that you will hear of small lots arriving during the next couple of months of sales made by these gentlemen now in our hands, but after our letters of this date are received we will accept no more business from Scotland except through your house.
We feel, then, that having put you in a position to work our brands exclusively in Scotland, we should naturally look forward to an increasingly large business in our oils. We expect our agents will show an energetic determination to secure business, which cannot fail of placing our company in the position which it should naturally take in the cotton oil trade in your market. On our part nothing shall be wanting to assist you in securing the business.”
The appointment was advertised in the
Glasgow Herald of 22nd April 1898, and with the approval of the American Cotton Oil Company, M'Nairn & Company had the appointment printed on their let ter paper.”
The following was the advertisement in the
Glasgow Herald:—
“
Commercial News.
Messrs. John M'Nairn & Company, 104 Brunswick Street, Glasgow, advise us that they have been appointed exclusive agents for Scotland for the American Cotton Oil Company for the sale of their products.”
No. 28 of process (
infra) is a specimen offer by M'Nairn & Company to sell oil, and No. 29 (
infra) is a specimen contract note:—
John M'Nairn & Co., 104 Brunswick Street, Glasgow, agents for the United Kingdom for the sale of the American Cotton Oil Company's oils and stearine.
104 Brunswick Street,
Glasgow, 4th April 1902.
Messrs. Ferguson, Shaw, & Sons,
Bishop Street.
Dear Sirs—We send you to-day sample of “Lily” White Oil, of which we can offer you 100 barrels now here @ 26s. 3d.
ex warehouse, 90 days.—Yours truly, J. M'N. & Co.’
From John M'Nairn & Company
To Messrs Ferguson, Shaw, & Sons,
Bishop Street.
‘Dear Sirs—We beg to confirm having, as agents for The American Cotton Oil Company of America, sold you the undernoted goods, agreeably with the printed rules of the Glasgow Provision Trade Association, subject to safe arrival. Vessel or vessels lost, sale void, casualities excepted. Your further orders will oblige.—We are, yours truly, J.
M'Nairn & Co.
Agents for the American Cotton Oil Company.
One hundred (100) barrels, ‘A.C.O. Co.’ brand prime Summer White Oil, at 24s. 3d. (twenty-four shillings and threepence) per cent, c.i.f. Glasgow. For shipment in equal quantities monthly, February to May, 1902, both inclusive.
Feby. 24, 25 Brls.
April 3, 25 Brls.
May 20, 25 Brls.
Payment: before delivery if required.
Usual c.i.f. terms.’
These two lots of oil were sold to M'Nairn & Company by the American Cotton Oil Company on 12th September 1904 on invoices which bore that the price was payable by a draft at sixty days' sight, with documents attached. The oil was shipped on 28th December 1904, on the Anchor Line steamer ‘Ethiopia’ at New York. On 30th December 1904 a bill of lading was granted by the Anchor Line making the oil deliverable to the American Cotton Oil Company's order, and on its arrival the oil was put in the stores of the pursuers, in name of the Anchor Line, for behoof of the holders of the bill of lading. The American Cotton Oil Company, on shipment, negotiated a draft for the price with their bankers in New York, and this, along with the bill of lading and policy of insurance, was forwarded by the said bankers to their Glasgow correspondents, who had the draft accepted by M'Nairn & Company, and retained the same until it should be retired by the acceptors.
On 31st January 1905, Ferguson, Shaw, & Sons bought from M'Nairn & Company 200 barrels P.S.Y. American cotton oil, including the two lots of