Scottish Court of Session Decisions

Lord Salvesen.—This case involves a comparatively small sum of money, but the questions raised are of general importance and present so much difficulty that I am not surprised that the Sheriffs have differed. The pursuer sues for certain benefits which she maintains are payable to herself under rule 30, section 2, of the rules of the defenders' Society, of which her husband at the date of his insanity was a member. She claims, in the first place, sick benefit for a period of one year, and in the second place that her husband's name should be placed on superannuation benefit and that the amount due should be paid to her in her own right. The Sheriff-substitute has allowed the first claim to the extent of £7, 10s., and disallowed the second claim in toto; but the Sheriff has assoilzied the defenders from the whole conclusions of the action.

The first question we have to decide is whether the pursuer has any jus quœsitum under the contract made between her husband and the defenders; and the main ground upon which it is maintained that she has none, and therefore no title to sue, is that the rules which constitute the contract are alterable at a General Council meeting, and that they might have been altered at any time so as to deprive dependants of any rights which they might otherwise have under rule 30 (2) of the existing rules. It is not said, however, that any alteration has in fact been made; and so far as the pursuer's first claim is concerned, the period in respect of which it is made has long since expired. We were referred to two authorities on this matter—the cases of Finnie, and Blumer v. Scott . These cases have no direct application, but were cited for certain dicta of Lord Chancellor Cranworth and Lord Wensleydale in the former, and of Lord Ardmillan in the latter, on the legal doctrine known as jus quœsitum tertio. Lord Ardmillan says:—“According to Lord Stair it is only where there is in a contract some ‘article in favour of a third party’ which cannot be recalled by one or both of the contractors that there is jus quœsitum tertio, and this doctrine is specially recognised and approved of by Lord Cranworth and Lord Wensleydale.… Even if not named, the third party may be entitled to adopt the agreement and enforce it by action. But in such a case it must be clear that both the contracting parties intended so to secure him, and that they could not, separately or together, revoke the stipulation.” Now I do not doubt that as a general statement of the law these propositions are perfectly sound. The contract between the pursuer's husband and the Society embodied in their rules might have been revoked by both or modified by the defenders alone by way of alteration of the rules so as to have taken away any right of action from the pursuer; but such revocation must have taken effect, as I understand the law, before a right of action emerged, if that right was to be entirely defeated, or before the period in respect of which the claim was made had expired, if it was to be partially defeated. I cannot imagine that if a claim has vested in a third party under a contract the vested interest can be discharged by any act of the contracting parties, and still less by the act of one of them who is the debtor in the obligation. The only analogous case cited was that of Burke, where it was held that the alteration by a trade union, during the insanity of a member, of the rule as to sick benefit to the prejudice of that member was binding on him, if made in accordance with the rule authorising and regulating alteration of the rules of the union. But in that case it was not contended that the rule took effect except with regard to the period after it was passed. I am therefore of opinion that the Sheriff-substitute reached a sound conclusion in holding that the agreement had become irrevocable when the pursuer became entitled to found upon it, and at all events until, pending the running of the sick benefit claimed, an alteration of the rules had in fact been made.

The pursuer now admits that the defenders' Society must be regarded at common law as an unlawful combination, in respect that some of its objects are in restraint of trade. Such societies are, however, legalised by the

Trade Union Acts, 1871 and 1876. By section 3 of the former Act it is provided:—“The purposes of any trade union shall not, by reason merely that they are in restraint of trade, be unlawful so as to render void or voidable any agreement or trust.” Had there been no further provision in the Act, trades unions might have sued or been sued in respect of any agreement entered into between them and their members; but section 4 contains an important limitation and, so far as applicable to the present case, provides that “Nothing in this Act shall enable any Court to entertain any legal proceeding instituted with the object of directly enforcing or recovering damages for the breach of any of the following agreements, namely:—(3) Any agreement for the application of the funds of a trade union (a) to provide benefits to members.” If, therefore, this had been an action at the instance of the pursuer's husband or his representative, it could not be entertained by a Court of law; but the pursuer does not here sue, as the plaintiff did in the case of Burke, as the administratrix of her husband. She is suing in her own right. Even this would not avail her if the agreement on which she founded was one which could be described as “providing a benefit to a member.” If the section of the statute had intended to strike at all agreements to provide benefits, it is difficult to understand why the words “to members” should have been added; and it is plain that it was not the intention of the statute to exclude the jurisdiction of a Court in the case of a claim made by a third party against a trade union, for such an action was competent at common law, even if the trade union were an unlawful combination—the third party not being tainted with the illegality which disabled a member from invoking the jurisdiction of the ordinary Courts.

The question, however, remains whether the pursuer, as a dependant of her insane husband, has any absolute right at all; or whether her demand for sick benefit is in the discretion of the Executive Committee. It is true that the words “shall be eligible,” on which the Sheriff relies, at first sight suggest some power of election, vested in a body or person different from the claimant, but these words occur frequently throughout the rules; and I think in the rule in question and elsewhere they must be treated as meaning “shall be entitled to, if qualified.” In the second paragraph of the first section of rule 30 the same words occur, and when one turns back to rule 19, one finds that the member who is declared to be eligible to receive unemployed benefit has an absolute right to such benefit at a stipulated rate, provided his being thrown out of employment was not the result of misconduct. We were referred to other passages in the rules in which the same words occur, where they must be construed as equivalent to “shall be entitled.” Thus in rule 18, section 7, there is a provision that members shall pay certain contributions, “and if entitled as per rule, shall be eligible to receive the following benefits.” I think this clause must be construed as meaning “if eligible or qualified as per rule, shall be entitled to receive.” The defenders appealed to the first part of section 1 of rule 30, which provides “that if any member, through loss of reason, be unable to follow his employment, the case shall be referred to the E. C., who shall deal with it at their discretion”; but I think that this clause is in contrast with the one on which the pursuer founds, and cannot be held to govern an entirely independent section. I accordingly agree with the Sheriff-substitute that, the qualification of the pursuer being admitted, she is entitled under the clause to which she refers to receive sick benefit. [His Lordship then dealt with other questions, turning upon the construction of the rules of the society, with which this report is not concerned. Inter alia, he found, on a construction of rule 30, that the pursuer was only entitled to superannuation benefit at the discretion of the Executive Committee, and as they had refused to grant it, that she could not enforce this part of her claim.]

Lord Guthrie.—I think the Sheriff-substitute has rightly decided that the appellant is entitled to receive sick benefit from the respondents for a period of thirty weeks, and not for fifty-two weeks as she claims, and that she is not entitled to receive superannuation allowance.

The effect of section 4 of the Trade Union Act of 1871 is that what are called “benefits to members,” conferred by the constitution of a trade union like the respondents, are rendered unenforceable at law. The dispute turns on whether the sick benefit and the superannuation allowance in question in this case, which are admittedly of the nature of benefits, are or are not benefits to members in the sense of the statute. Are they, one or both, primarily benefits to the members of the trade union themselves, and only secondarily, if at all, benefits to dependants like the appellant; or are they, one or both, primarily benefits to the dependants, and only secondarily, if at all, to the members themselves?

In my opinion, taking rules 20, 24, and 30 together, the two classes of allowances or benefits are sharply contrasted in the case of insane members, like the appellant's husband, who have wife, family, or parent dependent on them, first, in the form of words by which they are conferred, second, in the persons to whom they are payable, and, third, in the purposes to which they are applicable. The sick benefit is payable directly to the dependant, and those alimenting the insane person can have no claim on it; while the superannuation allowance would be payable to the legal representatives of the insane person, and the whole of it would be available for his support.

An apparent difficulty is caused by the expression, in rule 30, “they shall be eligible to receive sick benefit.” But a consideration of the terms of rules 20, 24, and 30 leads me to the conclusion that the word eligible is equivalent in this clause to “entitled, if qualified.”

The respondents founded strongly on the case of Burke, in support of their proposition that the appellant could have no jus quœsitum under an agreement between a member and the Society constituted by rules which are revocable by the Society. But that case in no way conflicts with the appellant's right to vindicate a right which had vested in her under the rules when she made her claim.

Lord Justice-Clerk.—I concur in the opinion of Lord Salvesen, which I have had an opportunity of reading.