Scottish Court of Session Decisions

This was an application at the instance of Francis More, liquidator of the Scottish Pacific Coast Mining Company, for an order to stay proceedings.

On 2d February 1885 the shareholders of the company had resolved that the company should be voluntarily wound up, and on 11th March following a supervision order had been pronounced by the Court.

In the month of June 1885 James Davidson Walker and Henry Dalbiac Harrison, partners of the firm of Falkner, Bell, & Company, trading as merchants in San Francisco, California, and also trading in London under the firm of Bell, Harrison, & Company, raised in the Superior Court of San Francisco, California, an action against the company to recover three sums, amounting in all to $7469·18, consisting of (1) a sum of $2594·18 upon an alleged account for commissions on bills of exchange drawn and negotiated by Falkner, Bell, & Company on account of the company at its request between March 1881 and June 1884; (2) a sum of $1950 upon an alleged account for rent of office, stationery, and postage, furnished and delivered by the plaintiffs to the company at its request between said dates; and (3) a sum of $2925 upon an alleged account for services rendered by the plaintiffs for the company in and about its business, and in keeping its accounts at its request between said dates.

The plaintiffs in this action had attached the shares of the Bonanza Gold Mining Company, and of Hunter's Gold Mining Company, the stock of which belonged to the company in liquidation.

Further, on or about 12th November 1885 Falkner, Bell, & Company raised in the Superior Court of San Francisco an action against the company for payment of a bill of exchange, at sixty days' sight, for £2000, dated 20th May 1884, drawn by Falkner, Bell, & Company upon, and alleged to be accepted by, the company, dishonoured by the acceptors, and retired by the drawers. That action concluded for payment of this sum, viz., $10,236·36, with interest and costs of suit.

The liquidator in the present application stated that the company had a good defence to these actions, but that whatever claims the firm have against the company ought to be made and determined in the liquidation. The prayer of the note was that, the Court should “pronounce an order restraining the said James Davidson Walker and Henry Dalbiac Harrison from taking any further proceedings in the foresaid two actions raised in the Superior Court of San Francisco aforesaid, in or about the months of June and November 1885 respectively, by the said James Davidson Walker and Henry Dalbiac Harrison, copartners as aforesaid, or in whatever other name or form the said actions may have been brought against the said Scottish Pacific Coast Mining Company (Limited); and also to restrain them from taking or continuing any further proceedings in or connected with the foresaid attachments of the shares held by the said company in the foresaid Bonanza Gold Mining Company and Hunter's Gold Mining Company, or any other proceedings for attaching or affecting the property, heritable or moveable, real or personal, of the company, whether in security or in satisfaction or execution of any judgment or decree in the said actions; as also to ordain the said James Davidson Walker and Henry Dalbiac Harrison, copartners foresaid, to abandon and withdraw the foresaid two actions and the said attachments of the said shares.”

It was stated in the note that Mr Walker was resident in London, and Mr Harrison in San Francisco; that they were the only partners of the firm which traded in London as Bell, Harrison, &Company, and in San Francisco as Falkner, Bell, &Company; and that they were possessed of assets and property in London and elsewhere in the United Kingdom which were liable for the obligations of both firms.

These facts were also stated, which distinguish the case from that of the Liquidators of the California Redwood Company, which immediately precedes, supra, p. 553:—“The said James Davidson Walker was the managing director of the company now in liquidation; and the partners of the firm of Falkner, Bell, & Company are on the register of members as holders of shares therein, and are due arrears of calls thereen. Further, the said firm of Falkner, Bell, & Company on 18th November 1884 raised an action in the Court of Session against the company for payment of £3000, the amount of a bill drawn by them (Falkner, Bell, & Company) upon and alleged to be accepted by the company, dated 16th June 1884. The said action is defended by the company and liquidator, and is at present in

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dependence in this Court. It has been conjoined with another action, also in dependence in this Court, raised on the same date, in which the company craves the Court to interdict the said firm and the said James Davidson Walker from doing diligence, and to suspend the threatened charge upon a bill for £1000 dated 6th June 1884, drawn by the said firm upon and alleged to be accepted by the company, which action is being defended by the company and liquidator. The defence to the claim upon the said two bills is, that the said firm of which the said James Davidson Walker, a director and promoter of the company, is a partner, obtained a sum of £7000 or thereby of promotion money or illegal commission in shares of the company from the vendor of certain property to the company.”

After the commencement of the liquidation Falkner, Bell, & Company on 30th June 1885 had presented a note to the Court for leave to proceed with these actions, and this had been granted.

The liquidator founded on sections 87 and 122 of the Companies Act 1861, quoted in the preceding report. He averred that he would be able by means of the provisions of section 122 to get the order enforced by the Chancery Division of the High Court of Justice in England, which Court had jurisdiction over the firm.

The respondents lodged answers in which they stated “That the matters and facts to be inquired into in said actions took place in or near San Francisco, and almost all the witnesses who can speak thereto are resident there. It would cause great additional expense to have any inquiry in this country. The questions of law at issue in said actions, moreover, fall to be determined by the law of San Francisco, which is in several important respects different as to these questions from the law of Scotland.. .. The Court of Session has no power or authority over the plaintiffs in said action in San Francisco, and the Court in San Francisco, where said proceedings are pending, would not recognise or give effect to any order or warrant by the Courts in this country ordering the proceedings in San Francisco to be stayed. The prayer of the note should be refused in respect, inter alia, (1) it is incompetent; (2) the Court of Session has no jurisdiction over the plaintiffs in said proceedings in San Francisco, and said plaintiffs are not subject to the jurisdiction of any of the Courts of England; (3) the Court of Session is not a forum conveniens in regard to the questions at issue in the actions pending in San Francisco.”

Argued for the liquidator—The Court had jurisdiction over both respondents (1) because they were carrying on an action in the Court of Session which placed them in the position of creditors in the liquidation; (2) the respondents were shareholders of the company; (3) Walker was resident in England; and (4) the firm had property in England— cf. argument in the preceding case of the Liquidation of the California Redwood Company, supra, p. 554.

Argued for the respondents—The fact that actions had been raised in the Court of Session by Falkner, Bell, & Company before the commencement of the liquidation should not prejudice the right of the respondents to make good their claims in California. There was no case in which proceedings in a foreign court had been restrained in the Court of Session in virtue of the statute— Carron Company, 5 Clark (H. of L.) 416, at p. 440. Even if the case was within the statute it was not just that the inquiry should proceed in this country.