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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Ammon v. Tod [1912] ScotLR 244 (09 January 1912) URL: http://www.bailii.org/scot/cases/ScotCS/1912/49SLR0244.html Cite as: [1912] ScotLR 244, [1912] SLR 244 |
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Page: 244↓
[Sheriff Court at Glasgow.
The defender in an action against whom decree with expenses had been pronounced in the Sheriff Court appealed to the Court of Session. Pending the appeal the parties settled the case without the knowledge of the pursuer's agents, the pursuer accepting a sum in full of all his claims against
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the defender. The appellant having thereafter craved the Court, in respect of the compromise above referred to, to assoilzie him, and to find no expenses due to or by either party, the pursuer's agents lodged a minute craving to be sisted as parties to the case in order that they might obtain decree against the defender and appellant as agents-disbursers for their expenses. Held by a Court of five Judges ( diss. Lord Kinnear) that the minuters were entitled to be sisted as parties to the cause, and to obtain decree for their expenses against their client's opponent.
Arthur F. Ammon, import and export merchant, Haworth Buildings, Manchester, raised an action in the Sheriff Court at Glasgow against J. Walker Tod, agent, 102 Union Street, Glasgow, in which he, inter alia, sought payment of £2000 damages for breach of contract.
The following narrative is taken from the opinion ( infra) of Lord Johnston—“The circumstances in which this question arises may, so far as is necessary for disposal of the question at issue, be very shortly stated.
The respondent Ammon held an agency for the Positive Lock Washer Company of Newark, New Jersey, U.S.A., as sole export agent for the sale of their Positive Lock Washer, excepting in the United States and Canada. The appellant Tod was in the respondent's service in Manchester, which was the headquarters of his business, and as at 1st June 1906 the respondent engaged him to represent him in Scotland. This engagement continued from year to year, and at 1st February 1909 was current until 1st June of that year. The respondent alleges, the Sheriff-Substitute has found, and the Sheriff has affirmed, that behind the back of the respondent the appellant, in the end of 1908, went to America, and there succeeded in filching from him the agency which he held from the American Company, and which on 1st February 1909 was withdrawn from the respondent and transferred to the appellant. Concurrently, on 30th January 1909 the appellant intimated to the respondent that he would from that date cease to represent him in Scotland, and terminated their current agreement, which had still four months to run.
“It is not to be wondered at that litigation between the parties immediately ensued. At once the respondent raised against the appellant an action in the Sheriff Court at Glasgow for interdict, accounting, and damages. In this action the Sheriff, on appeal on 17th March 1910, (fully agreeing with his Substitute on the facts, though varying his interlocutor on the point of damages) found it unnecessary, owing to efflux of time, to grant interdict, decerned against the appellant for £68 in the accounting, and for £100 in name of damages, with expenses.
Though the merits of the case have not been gone into before us, it is a factor which I cannot exclude from view, that both Sheriffs found against the appellant in matter of fact by interlocutors which exhausted the cause in their Court.
On the 30th March 1910 the defender appealed to this Division, and on 12th May of that year the case was sent to the roll. While the case was in the roll awaiting hearing, the appellant came to a settlement with the respondent without the knowledge or consent of Messrs Lindsay, Meldrum, & Oatts, writers, Glasgow, and Messrs Erskine Dods & Rhind, S.S.C., Edinburgh, who had represented the respondent in Glasgow and Edinburgh respectively. This settlement was not apparently reduced to writing, but its terms are evidenced by those of a receipt dated Manchester, 3rd February 1911, granted by the respondent to the appellant, in which the former acknowledged having received from the latter ‘the sum of seventy pounds sterling in full settlement of all claims of principal and expenses which I have in the action at my instance at present pending in the Court of Session, Edinburgh, against the said James Walker Tod, and I hereby discharge him of all such claims under said action.’
In these circumstances, and before the case came on for hearing, the appellant lodged a note craving the Court, in respect of the discharge above referred to, to recal the interlocutor appealed against, to assoilzie him from the conclusions of the action, and to find no expenses due to or by either party. This was quite consistent with the terms of the discharge, and in other circumstances the Court would have nothing to do but to interpone authority to the settlement and grant the crave of the appellant.
But this application was met by the agents lodging a minute craving that they might be sisted as parties to the action as agents-disbursers, ‘in order that a decree may be pronounced against the appellant and defender in their favour as agents-disbursers for the expenses of the action as between agent and client.” This minute was answered by the appellant, and on the face of the minute and answers the question was sharply raised whether the settlement which had taken place on the 3rd February 1911 was not made by the appellant in knowledge of the respondent's insolvency and in fraud of his agents’ rights? I do not think that it is necessary to go into the averments on this matter, which could not be accepted without proof, in disposing of the question before us. Nor, in my opinion, is that question affected by the allegation sought to be introduced after the last discussion, to the effect that the respondent was at any rate now in fairly affluent circumstances and able to meet his agents’ claims.”
Parties were heard on the minute and answers on 1st March 1911 before a Court consisting of the
On 17th March 1911 the Court appointed the case to be heard before Five Judges, and it was so heard on 19th May following.
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Argued for the minuters—Where, as here, decree had been pronounced in the pursuer's favour, with expenses, and where, as here, the action had been settled extrajudicially behind the back of the pursuer's agents, the latter were entitled to be sisted in order that they might get decree for their expenses, to which, on the settlement, they had acquired an independent right— Hamilton v. Bryson, June 17, 1813, F.C.; Rox v. Stewart, July 3, 1818, F.C. ( vide also Session Papers therein); Sloss & Gemmil v. Kennedy, May 28, 1823, 2 S. 344; M'Lean v. Auchinvole, June 29, 1824, 3 S. 190; Ferguson v. Richardson, July 8, 1826, 4 S. 814; Cheyne v. Cheyne, January 18, 1832, 10 S. 202; Macgregor & Barclay v. Martin, March 12, 1867, 5 Macph. 583, 3 S.L.R. 295; Cornwall v. Walker, March 18, 1871, 8 S.L.R. 442; Crawford v. Smith and Another, November 20, 1900, 8 S.L.T. 249. But for this appeal they could have got decree de piano, i.e., without being sisted. The decree for expenses need not be a final decree— Rox, cit. supra. Further, where, as here, the settlement was in disregard of and without any consideration for the agents’ rights, the latter were not bound to go into the merits. The cases of Murray v. Kyd, February 14, 1852, 14 D. 501, and Macqueen v. Hay, November 29, 1854, 17 D. 107, relied on by the respondent, were really in the minuters’ favour, for in the former the stage had not been reached which entitled an agent to any expenses, for the expenses there were reserved, and so did not necessarily follow ( vide Lord Cockburn's opinion), and the latter was a case of collusion. The respondent was not entitled to be heard on the merits as against the agents’ right to expenses, for the merits had been disposed of by the settlement. Esto that quoad themselves the principals might open up the settlement, they could not do so quoad the agents so as to defeat their vested right to expenses.
Argued for respondent—The cases cited by the minuters were cases of final judgment, and were therefore inapplicable. In order to entitle an agent to decree for expenses in his own name he was bound to prove collusion— Murray v. Kyd, cit. supra; Macqueen v. Hay, cit. supra; Bell's Com., vol. ii, pp. 35 and 38. Standing the present appeal, the minuters had no vested right to expenses, for the judgment might be reversed. The case of Rox ( cit. supra) was distinguishable, for that was a case of collusion. In any event, the respondent was entitled to be heard on the merits where, as here, the agents had disregarded the settlement and gone on with the action. An agent was not entitled to prevent his client settling a case by continuing the litigation on his own account, for he was bound to look to his own client for his expenses. Moreover, the compromise of an action did not necessarily involve any admission of liability on the merits, and therefore in the absence of collusion it lay on the agents to show that expenses necessarily followed. They could not do so here, and that being so they were not entitled to be sisted.
At advising—
I have come without hesitation to the conclusion that they are not so bound.
It would be an almost grotesque situation that the Court should be obliged—for ex hypothesi there would be no obstacle—to give effect to the minute for the appellant and assoilzie him from the conclusions of the action, and yet have to allow the action to proceed on the merits, with the agents as contradictors, in order to dispose of a question of expenses merely. Such a course would be against the whole tradition and practice of the Court.
It appears to me, therefore, that either the agents are not entitled to be sisted at all as agents-disbursers, after a settlement has been made between the principal parties to include expenses, or that they are entitled to be sisted and to obtain decree de piano for their expenses against their client's opponent, without having to carry on the litigation on the merits in order to vindicate their claim to expenses.
The leading case on the subject is Hamilton v. Bryson (June 17, 1813, F.C.). In this action damages had been found due but remained to be assessed, and consequently there was no finding for expenses. The parties settled behind the agent's back for a sum to cover damages and expenses, and the agent took similar steps to those taken here. Notwithstanding the settlement, the Court decerned for expenses “to the effect that decreet may go out for the amount of the expenses sustained in name of the agent.” As the present appellant's contention is, so far as I understand it, based entirely on this, that by the appeal taken by him the case is still in dependence, I take the opportunity in passing to point out that Hamilton's case was also not only in dependence in the Outer House, but was still subject to being reclaimed to the Inner House. In giving judgment Lord Meadow-bank points out that up to that date the agent's equitable remedy had only been
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In Rox v. Stewart (3rd July 1818, F.C.) Hamilton's case was simply followed.
But in M'Lean v. Auchinvole ( 3 S. 190) the rule was made more precise. It was “held that there were three cases in which an agent was entitled to insist in the process to the effect of getting decree for the expenses in his own name. (1) Where expenses had actually been found due; (2) where they followed as a necessary consequence from the interlocutor previously pronounced; and (3) where the parties had entered into a compromise for the purpose of defeating his claim.” The second case figured shows, I think, that the rule is an equitable and expedient one merely, and that it can hardly be reduced to a definite governing principle of law. It is expedient that a litigant, possibly of slender means, should be able to get his case taken up by an agent, and it is equitable that the agent should be able to look to a return for his risk and labour with some security. But there is a counter consideration. It is not expedient to encourage litigation, or to prevent the timeous adjustment of differences, or equitable to give the agent such security for his remuneration unless his efforts have reached a point at which they may fairly be said to have materially influenced the result of the adversary's surrender. Hence the rider on the more general proposition that when expenses have not actually been found due at least they must have followed as a necessary consequence of what has actually been done.
The next case was Ferguson v. Richardson ( 4 S. 814). The circumstances are intricate, but the decision certainly carries the application of the rule quite as far as is sought here.
Subsequent cases have, I think, involved questions merely of the application of the rule of M'Lean's case ( supra). Thus in Murray v. Kidd ( 14 D. 501) the agent was not allowed to sist himself because, though an interlocutor had been pronounced repelling the defences, expenses had been specially reserved. Without further litigation it could not be determined what the result in the matter of expenses would be.
The case is however, important, for whereas in the previous cases there was no hint of the agent being sisted that he might go on with the litigation in order to gain a judgment on the merits and so obtain a finding for expenses, but only of his being sisted to move for expenses in his own name, it was assumed that the former would have been necessary, and this was the reason why the agent's motion was refused. For the reason why expenses were reserved was that though the defences were repelled this only led to an accounting, and the real, merits of the case lay in the accounting. But the Lord Justice-Clerk (Hope), whose opinion evinces marked hostility to the rule, states what I think is the key to the decision of the present question, viz.—The rule being fixed, it becomes a matter for stipulation in the compromise when the parties know of the rule.”
But there is one other case of importance, Cornwall v. Walker ( 1871, 8 S.L.R. 442), where Lord President Inglis takes the opportunity of correcting the expression used in M'Lean's case ( supra), viz., “followed as a necessary consequence.” His Lordship says that a finding of expenses “never is a necessary result or consequence—it is always in the discretion of the Court, and depends more or less upon how the litigation has been carried on. The true rule is that the agent is entitled to sist himself and prosecute the case to obtain a finding of expenses in his favour when such a finding of expenses is the legitimate consequence of what has been already done.”
Such being the state of the authorities, I admit without hesitation that were this case in the position that further litigation was necessary in order to reach a point at which it could be said that an award of expenses would legitimately follow, the agents could not be heard to ask to sist themselves in order to carry the litigation to that point. But that is not the position here. The litigation has been carried to a point at which not only would an award of expenses legitimately follow, but has actually been pronounced. That an appeal or a reclaiming note has been lodged does not alter that fact. The parties to the action enter on a compromise in the knowledge that an interlocutor finding on the merits and awarding expenses is standing. They compromise in order to get rid of both in favour of their own private arrangement, and in doing so they make it impossible that the action should go on to decide the merits of the appeal or reclaiming note. It would be against the whole catena of decisions which has created and defined the agent's equitable right that they should be so allowed thus to cut the ground from
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The true doctrine, in my opinion, is that when litigants approach a compromise the party who finds himself obliged to buy a discharge from claims must be held to know his opponent's agent's right, and must be held to contract with his opponent subject to that right. The limitation of that right admits of no continued litigation on the merits. Nor can a re-opening of the case on the merits with the agent be allowed in order to avoid his claim for expenses when it has been closed with the client.
I am inclined to agree with Lord Johnston that the authorities, so far as they go, are in favour of the view which he proposes that your Lordships should take; but then I agree with him also in thinking that there is no principle of law to be extracted from those authorities which ought to determine the right now in dispute. I think these cases might be followed if it were necessary to go any further than the decisions have already gone. But since there is, as I hold, and I think Lord Johnston holds also, no principle to support the decisions, I cannot see any reason why we should follow out those decisions to a logical consequence beyond what is definitely fixed. Looking at the question as it is now raised, I of course concede, what is perfectly familiar doctrine, that when one of two parties to a cause has obtained a decree for expenses his agent is entitled to be sisted in order that he may obtain the decree in his own name. In the ordinary case there is no necessity for sisting as matter of practice, because counsel for the successful party moving for decree of expenses moves at the same time that the decree should go out in name of the agent-disburser and not in that of the client himself, and that is allowed as a matter of course. But that can only happen when it is already fixed and determined not only that the party has a right to expenses but that he has a right to the operative decree for enforcing payment of these expenses; and therefore that practice does not appear to give the agent a right to come in to the exclusion of his client so long as it is still uncertain whether there is an absolute right to expenses vested in his client or not. I venture to say that there is no principle to support the claim now made, but I by no means say that there is no principle in law to support the agent's claim to recover the expenses in his own name in the ordinary case; and I think it is admitted on all hands that he is entitled to his decree, because that is a right which arises, not as against his client's opponent, but as against his client himself upon the contract of agency. I agree with a remark which Lord Johnston made, that it is not exactly what has been called the agent's hypothec—it is not a right of retention (which I think a somewhat more apt expression in the language of our law). It is not a right of retention, because there is nothing actually in the agent's hands which he would be otherwise required to make over to his client; but it is a right arising out of the contract of agency, which has been pushed further than retention, to give him an effective security upon moneys which it is assumed belong to his client. It must arise out of the contract of agency if it be a right at all, and it must therefore be a right against the client, because the agent has no contractual relation whatever with his client's opponents. Therefore it seems to me to be clear that the condition of the agent's right to obtain decree against his client's opponent for a payment of money must be that the client has a fixed and absolute right to compel such payment. The agent may be entitled to enforce the claim for his own benefit, because he has an effective security over a fund which he has recovered for his client in performance of his contract of agency. But the security cannot attach until it is fixed that the fund belongs to the client. But the client's right depends upon a judgment of the Sheriff Court, which is brought before this Court by appeal, and we cannot assume that the judgment is right without hearing the appeal on its merits. We are told that the merits are no longer before us, because the parties who are domini litis have agreed upon a compromise, and that would be a perfectly satisfactory result if the compromise were to receive effect. But the agent says he is entitled to disregard the compromise without allowing the question which it settled to be reopened. I could have understood his position, although I think there is no sound principle to support it, if he had maintained that the compromise should be set aside altogether, and claimed to take his client's place as dominus litis and to carry on the litigation for his own benefit. But what he proposes is that your Lordships should affirm the judgment appealed against without hearing the appeal, so that decree should go out against the defender for the whole amount found due, notwithstanding that he has already paid a sum which his opponent has agreed to accept as sufficient. This appears to me an extravagant stretch of any right of security which can possibly arise out of the contract of agency. But it is said to be out of the question to allow the whole action upon the merits to be tried at the instance of the agent in order that the question of expenses might be settled so as to give him a security which he has not yet got. Lord Johnston has said that your Lordships reject that idea, and I agree that that is out of the question. But it is equally out of the question that your
Page: 249↓
The next stage was reached in the case of Murray v. Kidd ( 1852, 14 D. 501), and the immediately succeeding case of M'Queen v. Hay ( 1854, 17 D. 107), and there is no doubt that the Lord Justice-Clerk Hope to a great extent went back on M'Lean's case. Now if the authorities had remained in that state I should have thought the question to be open, but I think the end came when the effect of both of these sets of cases was considered by this Division of the Court in the case of Cornwall v. Walker ( 1871, 8 S.L.R. 422), and I think that case was a considered judgment to the effect that the Court would abide by the view of M'Lean's case. Lord President Inglis begins his judgment by saying that in cases where expenses have been found due before the compromise there is no difficulty whatever; so, putting aside the question whether a certain interlocutor takes along with it as a necessary consequence a finding of expenses—a question which does not arise here—that seems to me to settle the matter, but for the point that has been raised by Lord Kinnear. Lord Kinnear thinks that we are going further than we have gone before, because the interlocutor in this case is not final in the sense of not having yet become immune by the lapse of time against some process of review. I am unable to take this view because I consider the point to have been already decided in the series of cases of which M'Lean's was the first. There are two senses of the word “final.” This case is here on an interlocutor which is final in the sense that it is final on the merits but is not final in the sense of review. In the cases to which I have just referred, there is no question that the interlocutors were final in the first sense, that is to say, on the merits. If that is so I think it settles the question, for I cannot conceive of the main question that is before us arising after an interlocutor has been pronounced that is final in the second sense—there is then nothing to compromise. If a person has an interlocntor deciding a case on the merits, and then allows the appealing days or reclaiming days to run out, he has no quid pro quo, and in all of these cases there must of necessity be a quid pro quo. As long as appeal is open one party may say, “True it is that you have got your judgment in Court below, but I am going to take you to the Court above, and you may lose what you have got,” and the other party may then say that he will compromise. In the other case there is nothing to compromise with.
If the matter had been open I think one might on principle come to a perfectly different result, because I think it is very difficult to say why an agent should get anything more than what is his client's money, and expenses that have been decerned for do not become the client's money until the other party has surrendered them. But as the matter is not open I agree with your Lordships.
The interlocutor will be, in respect of the motion of the defender to dismiss the appeal, to sist the agent for the defender, and to remit the case to the Sheriff that he may grant expenses.
The Court pronounced this interlocutor—
“Sist the minuters Lindsay, Meldrum, & Oatts as parties to the cause to the effect and extent of finding them entitled to the expenses found due by the defender and appellant in the Sheriff Court, and find them entitled to these expenses accordingly (under the reservation that upon the appellant making payment to the said Lindsay, Meldrum, & Oatts of the said expenses he shall be entitled to receive
Page: 250↓
from the said Lindsay, Meldrum, & Oatts an assignation of their right to recover the sum from the pursuer and respondent); and also sist the said minuters Lindsay, Meldrum, & Oatts, and Erskine Dods & Rhind, to the effect and extent of finding the said minuters entitled to the expenses of the minute of sist No. 56 of process and procedure thereon in this Court: Find the said minuters entitled to these expenses accordingly,” &c.
Counsel for the Minuters— Lippe— King Murray. Agents— Erskine Dods & Rhind, S.S.C.
Counsel for Defender (Appellant)— Horne, K.C.— Hon W. Watson. Agents— Dove, Lockhart, & Smart, S.S.C.
