Scottish Court of Session Decisions

Robert Cairns, shipowner, Leith, and others, registered owners of the steamship “Cairngorm” of Leith, pursuers, brought an action against Harry Walker Limited, general drapers and outfitters, incorporated under the Companies' Acts and having their registered office at Grange Street, Grangemouth, and H. Walker, general draper and outfitter, Grangemouth, defenders, in which they craved decree against the defenders, jointly and severally, and severally, for payment of the sum of £89, 2s. 6d. and interest thereon, the penalty the pursuers had incurred at Buenos Ayres in respect of contraband goods being on board their ship, to the illegal use of which, i.e., for the purpose of smuggling, they averred that the defenders had, in conjunction with the ship's steward William Post, been accessory.

The pursuers pleaded—“(1) The defenders having conspired with the said William Post to use the pursuers' ship for the purpose of concealing dutiable goods on board, and smuggling them ashore at Buenos Ayres, for the mutual benefit of the said William Post and the defenders, and the pursuers having suffered loss and damage thereby to the amount sued for, decree ought to be granted as craved. (2) The defenders are liable for the loss and damage sustained by the pursuers in respect that they supplied the said goods in the knowledge that the same were to be smuggled. (3) Separatim.—The defenders, being aware of the destination of the ship, and that the said goods could not be introduced into Buenos Ayres without payment of duty, and having as unpaid sellers an interest in the goods, were bound to disclose to the pursuers that the said goods were on board the said vessel, in order that duty might be paid on them, and not having done so, are liable in damages.”

The defenders pleaded, inter alia—“(1) The averments of the pursuers being irrelevant and insufficient to support the conclusion of their summons, the action should be dismissed with expenses. (4) Any goods furnished by the defenders to the said William Post having been sold and delivered by them in the ordinary way of trade, they as sellers are not responsible for the actings of Post which are complained of, and they should be assoilzied. (5) The defenders not being due and owing to the pursuers the sum sued for, or any sum, should be assoilzied with expenses.”

The facts of the case appear from the opinion of the Lord Ordinary (SKERRINGTON), who on 26th November 1912 found that the defender Harry Walker having been accessory to the wrongful and illegal use of the pursuers' ship “Cairngorm” for carrying goods from Grangemouth to the Argentine on a smuggling adventure, the defenders were liable jointly and severally to the pursuers in damages, which he assessed at £89, 2s. 6d. with interest thereon.

Opinion.—“The pursuers are the owners of the steamship ‘Cairngorm’ of Leith, which in December 1910 sailed from Grangemouth to Montevideo for orders, under a charter-party which named (articles 1 and 17) Montevideo, Buenos Ayres, and certain other places on the River Plate as the port or ports of discharge. On reaching Montevideo the steamer was ordered to Buenos Ayres, and she there discharged her cargo. While she was lying in that harbour the Custom-House officers found concealed in the steward's cabin and pantry a number of articles which were liable to duty according to Argentine law. These articles were seized, and the ship was condemned to pay a fine equivalent in our currency to £89, 2s. 6d. The receipt given by the Custom—House treasurer bears (as translated) that the fine was imposed upon the steamer ‘for failing to declare the goods found concealed in the steward's cabin.’ The steward deserted the ship and has disappeared. The articles seized formed part of a large assortment which the defenders had sold to the steward on credit, and which they had delivered to him at the ship's side before she left Grangemouth. The pursuers claim damages from the defenders, whom they allege to have been accessories along with the steward in the wrongful and illegal use of their ship for the purpose of smuggling. The defenders first called are a limited company which carries on business as general drapers, clothiers, hatters, and outfitters at Grangemouth, and the individual defender Mr Harry Walker is their managing director. The defenders' counsel expressly admitted that if Mr Walker had made himself personally liable to the pursuers the limited company was also liable jointly and severally. Accordingly I do

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not need to consider whether it was within the scope of Mr Walker's authority to act in the manner alleged by the pursuers.

Mr Walker, acting for his firm and afterwards for the limited company, has for a number of years sold what are called ‘slopchests’ to the masters of sailing ships and tramp steamers, and occasionally to stewards, but in the latter case only if the master knew and approved. According to its original and proper meaning, a slopchest is an assortment of slops, i.e., of articles such as clothing, soap, &c., which are likely to be required by seamen while absent from a home port. In the days of sailing ships, when voyages were lengthy, a slopchest was usually carried. It is now much less common, but it is carried on some tramp steamers, and the defenders still sell some in every year. Sometimes if a slopchest is carried, the master or steward, as the case may be, orders some goods which are not intended to be sold to the ship's company, but which are intended to be sold to the inhabitants of any port where the ship may happen to touch. Presumably in such cases the shipmaster acts upon the assumption that his owners would not object to petty trade of this kind. At anyrate no one could blame a shopkeeper merely because he did not communicate with the owners before supplying a shipmaster with a few trade goods as distinguished from slops. But if the shopkeeper knew that the goods were intended to be smuggled into a foreign country by means of a particular ship, and if he delivered the goods on board that ship or contracted that they should be carried by it, and that he should be paid the price out of the proceeds of the sale, he would in my opinion be an accessory to the commission by the master of a wrongful and illegal act, unless of course he in fact believed that the owners approved of such a use of their ship. I refer to the summary of the criminal law as to accession given in Macdonald's Criminal Law (3rd ed.), p. 6, and I see no reason why a different rule should apply in the case of a civil delict. A servant who, for his own purposes and without permission, makes use of his master's property in a manner calculated to cause him serious loss or even inconvenience is guilty of a breach of contract and also of a positive delict, because he is certainly in no better position than if he had been a mere stranger who used the property of another without permission. According to Bell (sec. 479) it is barratry on the part of a shipmaster if he ‘enters into any smuggling concern or evades duties to the loss of the ship.’ In the present case the only question in my view is whether the pursuers have proved that the defender Mr Walker knew that the steward intended to smuggle into the Argentine a portion of the contents of the so-called slopchest. Though it is not necessary for me to decide the point, I am disposed to think that it would be enough for the pursuers to prove that Mr Walker did not in fact believe that the steward intended to pay or arrange for the payment of duty upon any of the dutiable goods which he might sell in a foreign port to persons other than members of the ship's company.

The price of the slopchest which the defenders sold to the steward amounted to £96, 3s. 8 1 2d., and I think that both the value and the quantity of the goods were greatly in excess of what is usual. Further, the quantity was out of all proportion to what could have been required by a company of twenty-four during a voyage which was to last little more than a month. The largest items in the invoice were for waterproof coats, which are not the same as the oil-skins used by seamen.… In addition to the articles which the defenders stock, Mr Walker, by special request, procured from Glasgow a quantity of cheap watches and jewellery.… Such articles are not usually included in a slopchest, and it was out of the defenders' ordinary course of business to procure and sell them. As regards the nature of the contract between the defenders and the steward, there is no evidence to support the pursuers' averment of joint-adventure. I am disposed to think that the contract was really one of sale and return, such as is often made by a wholesale dealer when he provides a small shopkeeper with a certain quantity of stock. In the absence, however, of any notice on record or of any questions to Mr Walker at the proof as to the time at which he intended that the property in the goods should be transferred to the buyer, it would not be legitimate for me to decide that the goods when seized at Buenos Ayres were the property of the defenders. Even on that assumption the steward's possession of the goods would have been as prospective purchaser and not as the defenders' agent, so that the pursuers would still have required to prove guilty knowledge on the part of Mr Walker. I assume, however, that the property of the goods was transferred to the steward as soon as the articles had been selected and purchased. None the less the contract was peculiar in respect that the steward was to have credit until the ship returned to her first English port, the object being to enable him to pay for the goods out of the proceeds of the trading. Miss Mackenzie, who was one of the defenders' saleswomen, deponed—‘(Q) Was it the understanding that Post should pay for these goods when he had traded with them?—(A) I understand on the arrival of the ship, or else when the ship came back to an English port. Mr Walker said that at the time the slopchest was made up. He said it was to be paid for with the proceeds of the trading. It was the understanding that when Post had sold these goods and made his profit, he was to pay us with the proceeds of these goods.’ The important point about this evidence is that the credit was given upon the footing that the goods should leave Grangemouth in the pursuers' ship, and I regard that as a term of the contract. Though I decide the case on the assumption that the steward had no legal right to return any goods which he had been unable to sell, Mr Walker deponed that he would probably have been willing to

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take back any such goods. Obviously Mr Walker, though not technically a partner in the adventure, had a direct interest in its success. He deponed that the shipmaster verbally guaranteed to see him paid, but that meant nothing more than that the master promised not to allow the steward to be paid off without seeing that the debt to the defenders had been provided for. Accordingly Mr Walker arranged with the master that he was to be informed of the date and port of the ship's arrival in England, in time to enable him to travel there and get payment of his money. Newport, Mon., was mentioned by the master as being probably the first home port. It will be noticed that the master knew that the steward was buying a slopchest, and that is a strong point in favour of Mr Walker, as he was entitled to trust that the master would restrain any smuggling propensities which the servant might develop in the course of the voyage, and that the master would also personally see that all legal requirements were complied with, so as to protect the goods from seizure and the vessel from being fined in a foreign port. On the other hand, if there is evidence to prove complicity between Mr Walker and the steward, one must assume that the latter informed the former of his reasons for believing that there was a fair prospect of success in smuggling the goods into the Argentine. For this purpose it was necessary either to deceive the master into believing that the bulk of the articles had been sold to the crew before the arrival of the ship in the Argentine, or alternatively, it was necessary to make the master an accomplice. In point of fact, out of the whole contents of the slopchest the manifest declared only 20 waterproofs. It ought to have declared in addition the articles detailed in the list annexed to the receipt by the Custom-House treasurer, and also a number of other articles which the steward sold to persons who came on to the ship at Buenos Ayres during the few days between the first visit of the Custom-House officers and their second visit, when the seizure was made. I do not express any opinion as to how it came about that the master signed a false manifest. He deponed that he was deceived by the steward, and as he had no opportunity of cross-examining the witnesses, it would be unfair on my part to express any opinion to the contrary. In any case the procuring of a false manifest was a natural incident to the smuggling adventure initiated by the steward. If Mr Walker was a party to that adventure, the pursuers are, in my judgment, entitled by way of damages to the sum sued for, £89, 2s. 6d.

Apart from some hearsay evidence of statements by the steward, which, of course, are inadmissible as evidence of complicity on the part of Mr Walker, there is no direct evidence that he knew that the steward intended to smuggle any of the contents of the slopchest, and one must start with a strong presumption in favour of his innocence. But this presumption may be, and in my opinion has been, completely rebutted by the inferences to be drawn from the character of the mercantile adventure, from Mr Walker's conduct when he was, first charged with having smuggled, and from his testimony and demeanour in the witness-box. Of course he is not to be found guilty of using the pursuers' ship for the purpose of smuggling merely because he entered upon a speculation which, if it was innocent, was unbusinesslike and foolish, or because he wrote an uncandid letter to the pursuers’ solicitors. Business men do occasionally make foolish speculations, and innocent men have not always the moral courage to speak the truth. After seeing Mr Walker and hearing his explanations, I am quite satisfied that he was not innocent, but that, on the contrary, he was aware of the steward's scheme, and that the sale would not have taken place unless he had known that the steward saw his way to open a profitable market for a large part of the goods by smuggling them into the Argentine. It is proved that the steward could speak Spanish, and that he boasted after the ship had sailed that he knew the officials at Buenos Ayres and how to bribe them. According to Mr Walker's evidence he himself neither inquired nor knew, nor cared when, where, or how the steward intended to dispose of the goods. He knew nothing as to the steamer's destination except that he understood that she was going to Las Palmas for orders, after which she might be absent for an indefinite time sailing from port to port as the owners might arrange. He explained that if she was away for a long time the bulk of the goods might be sold to the crew; or again, she might touch at a duty-free port; or if she touched at a tariff port, the steward might get an advance from the master in order to pay the duties on any goods which he wanted to sell on shore; or he might arrange with a purchaser to pay the duties. All these were matters as to which Mr Walker felt no interest or even curiosity at the time when he handed over goods to the value of £100 to a complete stranger upon credit. In cross-examination, when confronted with the letter quoted below, Mr Walker had to admit that the steward had said that he had a friend out at the River Plate who could do with some ladies’ mackintoshes if the steward could take them out. The letter, which was addressed to the pursuers’ London agents in reply to their letter intimating the present claim, was as follows:—“Yours to hand re ‘Cairngorm.’ The steward, as customary in deep-water steamers, bought certain goods as a slopchest to supply crew on voyage and never mentioned the word smuggling. He also bought some mackintoshes, which he said were for a friend of his in the Argentine. I have no arrangement or connection with it in any shape or form. It was purely a business transaction, same as we have had for over twenty years, and I will be sorry to hear that either the owners or anyone else should lose through him. I have a balance of account to get, as he had not sufficient cash to pay all when here. I repudiate any liability.’ This letter falsely suggests that,

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apart from the mackintoshes, the goods were all of the kind which it is customary to supply to a crew on voyage, and it falsely states that the transaction, so far as concerned the writer, was of an ordinary character. It also falsely suggests that the steward had made a payment to account of the slopchest. Mr Walker's explanations as to this letter were unsatisfactory. As my decision depends upon considerations of credibility, I do not refer to the evidence in greater detail.

The defenders having been parties to the wrongful and illegal use of the pursuers' ship for carrying goods from Grangemouth to the Argentine, have infringed the pursuers' legal right and must pay damages. Even if no fine had been imposed on the ship, the case would not have been one for merely nominal damages—“ The Mediana,” 1900, A.C. 113. I have already stated that in my view the imposition of a fine upon the ship was a natural consequence of Mr Walker's wrongdoing. The defenders' counsel argued that even assuming that Mr Walker had been privy to the steward's scheme, he committed no wrong, or at least no wrong inferring liability to compensate the pursuers for the imposition of the fine. He argued that there was no competent evidence of the existence of a tariff at Buenos Ayres or of the goods being dutiable. The alleged Custom-House officers might have been brigands. Again, the ship was fined not for attempted smuggling, but in respect of the master's failure to declare the goods. It was the master's duty to enter all dutiable articles in the manifest of stores, and his failure, whether innocent or wilful, to perform this duty was the proximate cause of the ship being fined. Counsel further argued that the natural method of smuggling goods into Buenos Ayres was not to conceal them as was done by the steward but to declare them in the manifest. The receptacle containing the goods would then be sealed by the Custom-House officers, but a single officer might break this seal when stores were required for use. In return for a bribe the goods might be smuggled ashore without risk to the ship, though the actual smuggler might be punished if he was caught. I have mentioned these arguments in order to show that I have considered them, but I do not think it necessary to answer them.

I give decree for the sum sued for, with interest as part of the damages.”

The defenders reclaimed, and argued—The defenders were simply unpaid sellers of the goods, and an unpaid seller of goods could not be made liable in respect of the subsequent illegal actings of the purchaser, unless it were proved that he had entered into a conspiracy or a known form of joint adventure with the latter. Such a conspiracy in the present case could not be established unless the complicity of the captain were proved, and for this there was no evidence. On the other hand, the present case was clearly not one of joint adventure. Reference was made to Macdonald on the Criminal Law of Scotland, p. 6.

The pursuers were not called upon.