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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Morrison v. Morrison [1900] ScotLR 37_283 (12 January 1900) URL: http://www.bailii.org/scot/cases/ScotCS/1900/37SLR0283.html Cite as: [1900] ScotLR 37_283, [1900] SLR 37_283 |
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Page: 283↓
[Sheriff of Ayr.
In the sale of a retail business, in the absence of any express restriction or limitation, the business books and documents are carried to the purchaser.
A sold his business as tailor and clothier to B on terms embodied in a minute of agreement, which stipulated that A should retain right to all the book debts due to the business, and that B should collect these for him. The minute of agreement contained no reference to the business books. In an action by A for delivery of the business books and documents, held that the property in these was not reserved to A but passed to B.
Following on a minute of agreement of 30th January 1899, between James Morrison of the first part and Robert Orr Morrison of the second part, the first party sold the business of John Gloag & Company, tailors and clothiers in Largs, of which he was the sole proprietor, to the second party. The minute of agreement stipulated—“ Second. The first party shall retain right to the whole book and other debts due to the said firm at the date hereof, and shall pay all obligations due by the said firm prior to the date of the said valuation. Third. The second party agrees to collect free of charge all book debts due to the first party, and to hand over the sums as and when collected to the first party or his agent.” …
The business-books were not mentioned in the minute of agreement at all.
After the business had been taken over by Robert Orr Morrison, James Morrison raised an action in the Sheriff Court at Kilmarnock against him for delivery of—“(1) The day books and ledgers of the business of John Gloag & Company between 1st January 1891 and 13th January 1899; (2) The whole time books and wages books of the said John Gloag & Company between said last mentioned dates; (3) The whole invoices for goods supplied to said John Gloag & Company between said last-mentioned dates; (4) The whole receipts for
Page: 284↓
payments made by and on behalf of the said John Gloag & Company between said last-mentioned dates; (5) The cancelled cheques drawn by said John Gloag & Company upon the Royal Bank of Scotland, Largs, between said last-mentioned dates, together with the whole counterfoils of said cheques; (6) The bank book of the said John Gloag & Company with the British Linen Company Bank, Largs, between 1st January 1891 and 15th April 1898; (7) The cancelled cheques drawn upon said British Linen Company Bank between 1st January 1891 and the 13th January 1899, together with the whole counterfoils of said cheques.” … The above facts were set forth on record, and the pursuer pleaded—“(1) The whole books and documents sued for being the property of the pursuer he is entitled to delivery of the same.”
The defender pleaded—“(3) The defender having entered into an obligation to collect debts of the said business under said agreement, and intimation thereof having been given to the customers of said firm he is entitled to retain the said books till said obligation is implemented. (4) Separatim, the defender having purchased the said business under said agreement, he is entitled to retain possession of the said books and invoices as his property.”
On 14th June 1899 the Sheriff-Substitute ( Hall) pronounced the following interlocutor:—“Finds that by minute of agreement dated 30th January 1899 the pursuer agreed to sell, and the defender agreed to purchase, the business of tailors and clothiers carried on by the pursuer, under the name of John Gloag & Company: Finds that by the said minute of agreement the pursuer retained right to the whole book and other debts due to the said firm at the date thereof, and that the defender agreed to collect the said book debts free of charge to the pursuer: Finds that the said minute of agreement including the said stipulation as to the collection of the book debts, was advertised in the Edinburgh Gazette of 17th February 1899, and duly intimated to the customers of the said firm: Finds that the pursuer now seeks to recover from the defender the books, invoices, and other documents which had prior to the said minute of agreement belonged to the said firm: Finds that he has set forth no relevant ground to support such a claim: Therefore sustains the defences and dismisses the action.”
Note.—“While I have been unable to discover any direct authority on the point, I rather think it must be held as a general rule, and as matter of legal presumption, that the books of a mercantile business in which its transactions are recorded form an accessory or pertinent of the business, and that when the latter has been transferred the books go along with it to the transferee. When a man in selling his business reserves right to the book debts, this will certainly entitle him to the use of the books in so far as necessary for the purpose of collection, though I doubt if such a reservation, unless expressed in very special terms, would extend so far as to continue in him a right of property in the books themselves. In the present case, where the pursuer has stipulated that the defender shall collect the book debts free of charge to him, it is absolutely necessary to enable the defender to fulfil his obligation that the possession of the books should remain in his hands. Nor is it to be assumed that the stipulation referred to is conceived exclusively in the interest of the seller of the business, it being perfectly well understood that a stipulation of that nature has a material efficacy in maintaining the connection of the purchaser with the former customers, and generally in holding the business together. The pursuer's reason for demanding delivery of the books and other documents appears to be that he does not desire the stipulation as to the collection of the book debts by the defender to be carried out, but it is an essential article of an agreement into which he has voluntarily entered, imposing an obligation upon the defender of which the pursuer does not propose to relieve him, and also constituting a right in the defender's favour of which he cannot arbitrarily be deprived, and the pursuer has stated no shadow of ground on which the stipulation should be set aside. I have therefore dismissed the action.”
On 22nd August 1899 the Sheriff ( Brand) adhered.
Note—“According to the second article of the minute of agreement the defender Robert Orr Morrison ‘agrees to collect free of charge all book-debts due to the first party,’ that is, to the pursuer James Morrison. To enable the defender to do this, it was indispensable for him to have the firm's books, invoices, and other business accounts in his possession, and when the agreement was framed and executed it is difficult to believe that this was not fully intended by both parties. The pursuer having duly entered into the agreement is bound to adhere to it. Nor has any tenable reason been suggested for his not doing so. In the course of the discussion reference was made to the copy correspondence produced, and it was suggested to me on behalf of the appellant that on perusal of the letters I would find adequate grounds for arriving at a different conclusion from that reached in the interlocutor under review. So far from this being the case the perusal of the said letters which I have made confirms me in the opinion that the interlocutor under review is well founded. These letters show that repeated demands were made by the pursuer's agent for delivery of the said books, &c., but no good reason for such a demand is disclosed or has since been advanced. There is also much force in the consideration stated by the Sheriff-Substitute that possession of the books and documents in question by the purchaser is necessary, or at least extremely desirable, in order to his keeping due hold of the business he had acquired. Moreover, it would be impracticable for the defender to fulfil the undertaking he has given to collect all ‘book debts’ unless he had in
Page: 285↓
his possession the ‘books’ in which the ‘book debts’ are recorded. “Upon the whole matter I am clearly of opinion that the Sheriff-Substitute is right.”
The pursuer appealed, and argued—The principal value of the business books was to instruct debts due to the pursuer; therefore his was the primary interest in them. The defender's interest in them for the purposes of the business would be served by his having access to them. The Sheriff and Sheriff-Substitute had considered the case from the view that the pursuer wanted the books to collect the debts, but the true view was that the books remained the property of the pursuer, there being nothing in the agreement to deprive him of it. The meaning of the agreement was that it reserved to the pursuer everything that was not expressly carried.
The defender was not called upon.
Mr Morison relied chiefly on the pursuer's wish to have the means of getting in his outstanding accounts; but looking to the enumeration of books and documents sued for, that consideration would apply only to a comparatively small part of them. On the other hand, all the books and documents sued for might be required by the person carrying on the business, because without them he would be very much in the position of a person starting a new business without any trade connection. Accordingly, I think that if there had been no stipulation relative to the books and business documents in the agreement, the Sheriffs would have been right in thinking that the sale carried them to the purchaser. But, further, it is stipulated in the agreement that the defender shall act in effect as the pursuer's agent to collect the book debts due to him, and that implies that he should have the books necessary to enable him to do so. Mr Morison would say, however, that although the defender was to act as agent for the pursuer in that matter, the pursuer could intervene at any time and say he no longer wished the defender to collect the debts, and demand the books to enable him to collect them himself. That would raise a wholly different question from that which is presented in this action.
It is needless to say what might have been the rights of the pursuer if he had alleged that the debts due to him were not being collected by the defender, and that he desired the books or access to them to enable him to collect them himself, as he makes no such allegations. His claim is based exclusively upon the contention that he has right to the property of the books, and it appears to me that so far from the right of property in the books under such a contract being reserved to the seller it must pass to the buyer. I therefore think that the judgments of the Sheriff-Substitute and Sheriff should be affirmed.
The Court refused the appeal and affirmed the interlocutors of the Sheriff-Substitute and the Sheriff.
Counsel for the Pursuer— Campbell, Q.C.— T. B. Morison. Agent— A. C. D. Vert, S.S.C.
Counsel for the Defender— Salvesen, Q.C.— Hunter. Agent— James Ayton, S.S.C.
