Harbour

In the case of the ninth party the payment fell due before the passing of the Act of 1880, but there was a renewal by minute, dated 23rd April 1880, which was before the arrival of the term of payment, and again it was renewed, one time on the 24th of March 1885, and that renewal was also within the term of payment specified within the first renewal, and in that second renewal the term of payment is there postponed until the 15th of May 1893. It appears to me therefore that in so far as regards the b security belonging to the sixth party, and the security belonging to the ninth party, these are both perfectly good under the Act of 1872, and precisely conform to the forms of that Act and its schedule.

But there are three other securities constituted under the Act of 1872 which stand in a different position. These are (1) the security a belonging to the sixth party; (2) the seventh party's security; and (3) the eighth party's security.

Now, as regards the security belonging to the sixth party the term of payment arrived before the passing of the Act of 1880, and that assignment never was renewed at all.

As regards the seventh party's assignment, it fell due after the passing of the Act of 1880, and it was renewed, but it was renewed too late, because the term of payment precedes the date of renewal by some months.

The eighth party is in that respect in the same position. The renewal there was too late also.

Now, then, the condition of these three parties is this-That they have not complied with that part of the schedule of the Act of 1872, which, of course, as creditors under the assignment which they received, gave them the option of postponing the term of payment for an additional period, and fixing the rate of interest for that additional period. The schedule-I shall refer to it again-gives this alternative, "the said principal sum shall thereafter in virtue hereof remain as a loan to the said trustees until the expiry of a further term of years to be afterwards agreed on."

Now, no term of years was agreed on in the case of this sixth party's a security, and although a term of years was agreed on in the case of the seventh and eighth parties, it was not agreed on till after the assignment had lapsed altogether by the arrival of the term of payment. But I have placed these three parties all in the same position. They have all availed themselves of that option which is given by the terms of their assignments.

But then there is another thing. The schedule of the Act of 1872, which is also embraced in the assignments of all these three parties, is thus expressed, "or said principal sum"-that is, the principal sum in the original assignment-"shall be payable at the dates, and subject to the provisions contained in the said Act, in the same manner as if the said sum had been advanced on the day of payment first above specified, without any period being fixed for the repayment thereof.

scribed by the Acts. Now, what does that mean? It is not very happily expressed, because it leaves room for a good deal of argument upon its meaning. But it appears to me that, keeping in view that the whole object--or at least the main, if not the only object-of this new form of assignment prescribed by the Act of 1872, being to provide for fixed periods of payment, it is to give an opportunity of dealing with the rate of interest if the loan is to be further continued. This seems to me the most simple meaning, that if you do not before the term of payment arrives provide for another fixed term of payment with a fixed rate of interest, then you shall be held to continue the loan as from the date of payment in the original assignment with no fixed term of payment, and without any fixed rate of interest. I think that answers all the expressions contained in this alternative, and it would be very difficult to find any other reasonable construction of this particular schedule, because if it were to be held that the assignment came to an end altogether and lost its whole operation and effect by allowing the term of payment to pass without any renewal, these assignments, under the Act of 1872, would be liable to lose their force altogether in regard to the order of ranking. They would lose the benefit of the priority clause in the Act of 1880.

Now, that would be a very strong thing to imply from the use of such terms as we have here. It is not so expressed, and I do not think it can be implied, in the first place, because I think that would be a most unreasonable construction, and, in the second place, because the assignment in security stands just as good as it was from the beginning. The lapse of the period of payment prescribed in the assignment does not put an end to the effect of the assignment in security. Nothing of the kind is said, and surely that cannot be implied, and therefore, being an assignment, it stands good. The assignment bears that it is to subsist and be held by the assignee until the principal sum, with interest thereon, shall be fully satisfied and paid. Now, it would be entirely inconsistent with that to hold that an assignment which is contained in the original instrument granted to the creditor under the Act of 1872 should lose all its force and efficacy as an assignment in security having a certain priority attached to it. I therefore come to the conclusion that these parties, the sixth party for this security a, and the seventh and eighth parties, are also entitled to preferences as coming under the Act of 1872, and secured by the 72nd section of the Act of 1880. The priority clause of the Act of 1880 is very like the one which I read from the Act of 1842, but there are certain slight variances of expression, and therefore it might be as well to advert to it. It provides that [reads section 72 of the Act of 1880].

which was borrowed by the trustees before the passing of the Act of 1880. It is also an assignment which was in force at the passing of the Act of 1880, and it is still continuing. It has not fallen. It is admittedly still a subsisting obligation of these Harbour Trustees, and a subsisting security, and therefore it answers all the conditions of the 72nd section.

The result, therefore, is that these three securities which I have already mentioned are entitled to rank pari passu with the security b of the sixth party and the security of the ninth party. They were all ranked pari passu under the Act of 1872, and therefore tertio loco in this competition.

We then come to the tenth party, and there the money was borrowed under the Act of 1872. But then it was borrowed after the passing of the Act of 1880, and it therefore does not answer to the language of the 72nd section of the Act of 1880, because it is not 66 money borrowed before the passing of this Act," and it is not a security in force at the passing of this Act, and if it does not get the benefit of the preferences conferred by the 72nd section of the Act of 1880, I know of no preference it has, and that being so, it must fall down in the scale, and rank with the securities which are given in the Act of 1880 itself.

Then comes the eleventh party, and the money there is borrowed under the Act of 1880, and of course the eleventh party does not contend that he can rank with securities under the Act of 1872, and indeed he does not maintain anything except that the sixth, seventh, eighth, ninth, and tenth parties should be reduced to that level. That is said to be the sole contention of the eleventh party. From what I have said upon the previous cases that is to say, upon those of the sixth, seventh, eighth, ninth, and tenth parties-it will be obvious that the conclusion I come to upon the assignment of the eleventh party is that he has not succeeded in bringing down to his own level any of these previous parties except the tenth.

There is in the case of the eleventh party also the funded debt, or share of the funded debt, but that does not seem to give rise to any difficulty so far as I can see, because by section 77 of the Act of 1880 it is obvious that his share of the funded debt ranks pari passu under his assignment under the Act of 1880.

Then, again, comes the twelfth party, and he is in the unfortunate position of not having any assignment at all, and thereby stands in a very unfavourable position of contrast to the other parties before us. There are in this twelfth category three cases presented. One of the securities, if it may be so called, which is held by the twelfth party is entitled an interim receipt. It bears date 28th December 1867, and it is in these terms-"I have this day received from William M Clure, Esquire, as a loan to the Greenock Harbour Trust, the sum of £300 sterling, for which I will procure an assignment by the trustees in exchange for this receipt.-John Adam, Treasurer, p. William Smith. The second

is rather longer in point of expression, and it is dated 7th January 1870. The document sets out the Act of Parliament, being the Act of 1866, under which the money is advanced, and it proceeds "I have this day received from" so and soas a loan to the Greenock Harbour Trust the

sum of £200, which has been placed to their credit in the books of the trust, and for which interest at the rate of 4 per cent. per annum, or at such other rate as may be fixed by the Finance Committee of the said trust, on six months' notice given, will be paid half-yearly from this date, at the terms of Whitsunday and Martinmas. John Adam, Treasurer." And then the third document is dated 19th January 1887, and bears to be "by virtue of the borrowing powers contained in the above-named Acts, I acknowledge to have this day received from" the creditors "the sum of £600 sterling as a loan to the Greenock Harbour Trustees till Martinmas 1889 at 4 per cent. An assignment and warrants for the interest thereon will be prepared forthwith, and delivered in exchange for this receipt.-William Hutchison, treasurer."

Now it will be observed that the first of these receipts was granted before the passing of the Act of 1872, and the second also, while the third is granted after the passing of the Act of 1880, and therefore they stand in a somewhat different position as regards that matter. But the great objection to them is that they are in the form of a security which the Greenock Harbour Trustees have no authority to grant. Whether they will entitle the holders to demand delivery of assignments in security for the moneys mentioned in these receipts is a different question. But there is no such question put to us in this special case. The question put to us in regard to these receipts is the thirteenth, and it is this-" Have the twelfth parties, or any and which of them, the same rights and preferences as if formal assignments had been delivered to them of the dates of their respective interim receipts, or are they, or any and which of them, now entitled to demand such assignments from the first parties to that effect?" That is the question we have to answer, and as there is no question put to us as to the right of the parties to demand delivery of assignments now, at the present date I say nothing. I say nothing about that question, or about what the effect of these assignments might be if they were granted, but I am quite prepared to answer the thirteenth question in the negative upon both branches of it.

The first part of the particular question appears to suggest to us that these receipts shall be in this competition equivalent to assignments granted of the same dates-that is to say, that the receipt No. 1, which is dated in 1867, shall rank along with the parties who are here preferred secundo loco, viz., the creditors advancing their money under the Act of 1866, and so also with the second, while of course the third cannot obtain any preference under that Act, but would only rank in the last grade with the creditors under the Act of 1880. But it is quite obvious, I think, that as the statutes prescribe the particular form in which the securities are to be given, and state distinctly what is to be the effect of these forms, if different forms are adopted, these receipts cannot possibly be allowed to have the same effect as the assignments prescribed by the statute. In short, the form which has been adopted here is no obligation by the Greenock Harbour Trustees at all. It is a receipt granted by their treasurer. But there are clauses in these Acts of Parliament which

Harbour

expressly provide for the manner in which the Greenock Harbour Trustees can bind themselves; and the only manner in which they can bind themselves to any effect at all is by a certain number of the trustees signing documents of debt along with the clerk or some other officer, and therefore even in that view these receipts are good for nothing at all. I therefore come to the conclusion without any hesitation that the holders of these receipts are not in a position to ask anything in the nature of a preference here, because they have not got statutory documents, and in the second place, as regards the one granted in 1887, the course which is probably open to the holder of that document is to ask that an assignment may be given to him in terms of the obligation, but what the effect of that assignment might be I give no opinion, because it is not raised in this special case.

It appears to me that that disposes of the whole case with the exception of one question, and that is the question, What is to be the effect of the insertion in some of the statutory securities of the words "the works and property," in addition to the words "rates and revenues of the trust?"

Now, that stands in a very curious position as regards the statutes, as was pointed out by the Dean of Faculty, in this respect, that in the statute of 1842 the advances are made on the credit of the rates and duties and other property vested in the trustees, and it is provided that the trustees may assign their rates, duties, and property, or any part thereof, and oddly enough, the form in the schedule does not correspond with that provision in the clause of the statute, because the form in the schedule does not assign the property, but only the rates and revenues under the Act of 1866. There is no mention of anything either in the clauses or in the schedules except rates, duties, and revenues. There is no assignment of the property or works. In the Act of 1872 it is provided that the trustees may borrow on the rates, duties, and other revenues of the trust, and of the works and property of the trust, and in this case the schedule is in harmony with the clauses, which it is not in the Act of 1842, so that the Act of 1872 is the most complete in the way of assigning "works and property" in addition to " rates and revenues."

In 1880 there is no form of assignment given in any schedule, but there is a clause, 71, which is rather important in this connection, which provides-[reads section].

Now, that gives power in dealing under the Act of 1880 to adopt any of the forms of the previous Acts, and therefore creditors lending money under the Act of 1880, if they can agree with the trustees, may take their security in the terms provided in the Act of 1866, in which case they will have no assignment of the works and property, or they may take it under the Act of 1872, under which they will have an assignment of the works and property of the trust.

I think this only leads one to the conclusion that the insertion of these words, "works and property of the trust," was really not meant to have any real effect at all. The meaning of inserting these words at all is just to give a little more inten

sity to the conveyance. The works and property of the trust are revenue producing subjects, and it is quite obvious that in no event under these Acts of Parliament was it ever contemplated that a security should be created over the property and works of any efficacy, which could not be made effectual without doing real diligence against the property and works. I do not suppose any of your Lordships would have the slightest hesitation in saying that an adjudication led by one of the creditors under the Act of 1872 to carry off the harbour works from the statutory trustees would be an utterly absurd and ineffectual proceeding, and yet unless this is to be the effect of this assignment of the property and works, I do not see very well what they can get from it except the revenue derived from the works and property. They must either be content with the revenue derived from the property and works or carry off the property itself, and it is certainly obvious that the latter was not intended, and if so, then the only thing remaining is the revenue produced by the use of the harbour and works. The difficulty of giving any other construction to these words under the different statutes may be further illustrated by this, that in the Act of 1872, section 40, it is provided that all assignments given under the provisions of the statutes, and particularly under the Act of 1866, are to have a priority over the assignments granted under the Act of 1872. But if assignments granted under the Act of 1872 are to contain a more comprehensive security than those granted under the Act of 1866, then that section 40 would be to a considerable extent defeated altogether, and the preference thereby created would not be an effectual preference. And it must be observed that the language of these two priority clauses is very distinct and very complete. Assignments -that is to say, assignments in security of certain sums of money-if they be in operation and have effect at the date of the passing of the new Act, are to have priority in all respects over assignments granted after them. Now, if the assignments granted under the Act of 1872 are to have a preference over the property and works in competition with assignments granted under the Act of 1866, that is plainly just a contradiction in terms of the 40th section of the Act of 1872.

I think these remarks go over the whole points we are asked to consider, and it will not be difficult, I imagine, to apply the observations which I have made if your Lordships agree with me in answering the various questions which are appended to the case, and I do not go into them in detail at present.

LORD MURE and LORD ADAM concurred.

LORD PRESIDENT-I suppose counsel will now be able to prepare answers to the questions and submit a concerted interlocutor.

The Court pronounced this interlocutor:

"The Lords having considered the special case, and heard counsel for the parties thereto, in answer to the first question in the case, Find and declare that the second parties rank on the rates and revenues of the trust pari passu with the third parties, and preferably to the fourth, fifth, sixth, seventh,

eighth, ninth, tenth, eleventh, and twelfth parties: In answer to the second question, find and declare that the third parties are in the same position as the second parties, and answer the second branch of the question in the negative: In answer to the third question, find and declare that the fourth parties rank on the rates and revenues of the trust pari passu with the fifth parties, and preferably to the sixth, seventh, eighth, ninth, tenth, eleventh, and twelfth parties: In answer to the fourth question, find and declare that the fifth parties are in the same position as the fourth parties, and answer the second branch of the question in the negative In answer to the fifth question, find and declare that the sixth parties rank on the rates and revenues of the trust pari passu with the seventh, eighth, and ninth parties, and preferably to the tenth, eleventh, and twelfth parties: In answer to the seventh question, find and declare that the seventh party ranks on the rates and revenues of the trust pari passu with the sixth parties: In answer to the ninth question, find and declare that the eighth and ninth parties rank on the rates and revenues of the trust pari passu with the sixth and seventh parties, and preferably to the tenth, eleventh, and twelfth parties: Answer the first branch of the eleventh question in the negative, and in answer to the second branch, find and declare that the tenth party ranks pari passu with the eleventh parties, and preferably to the twelfth parties: Answer the thirteenth question in the negative: Answer the sixth, eighth, tenth, twelfth, and fourteenth questions in the negative Further answer the fifteenth question in the negative: Of consent find the whole parties entitled to expenses as between agent and client out of the revenues of the trust," &c.

Counsel for the Trustees-Balfour, Q.C.M'Kechnie. Agent-R. Bruce Cowan, W.S. Counsel for the Second, Third, Fourth, Fifth, and Sixth Parties Dickson. Asher, Q.C. Agents-Graham, Johnston, & Fleming, W.S. Counsel for the Seventh Party-Gillespie. Agents-Gillespie & Paterson, W.S.

[Sheriff of Lanarkshire. DAWSON & COMPANY V. GOLD. Agent and Principal-Sale-Liability.

By an agreement between G, the proprietor of an hotel, and M, the occupant, it was acknowledged by M that the whole furniture and effects in the hotel belonged to G, and he agreed to transfer to G the licence for the hotel. M further agreed to manage the hotel for G, and to account to him for the drawings, for which he was to be paid a weekly wage. G then agreed not to charge rent for M's possession from the term immediately preceding the agreement, and M agreed to account to G for the stock in the hotel as at a certain date. The licence was thereafter transferred to G. Subsequently goods were supplied to M for the purposes of the hotel, on his order, and by a firm who were in ignorance of G's connection with the hotel. On learning of the agreement, however, they raised an action against G for the price of the goods. G's defence was that he had not ordered the goods, that the agreement had not been acted upon, and that M had not managed the business for him. Held, on the evidence, that G was liable. This was an action in the Sheriff Court at Hamil. ton at the instance of M. D. Dawson & Company, brewers, Clydesdale Brewery, Glasgow, against John Gold, Hamilton, for £51, 10s., as the value of various quantities of stout and ale which the pursuers averred they had sold and delivered, between 4th January and 26th April 1886, to the defender, or on his behalf to his manager, W. H. M'Latchie, at the Royal Hotel, Calderbank, Lanarkshire, the defender being the proprietor thereof.

The pursuers averred that M'Latchie was the defender's manager, and had sole charge of the hotel, conform to an agreement between them, and that he received the goods, which were sold in the ordinary course of business in the hotel.

The agreement in question was entered into in October 1885 between John Gold of the first part, and W. H. M'Latchie and his wife, Rosina Gold or Armstrong or M'Latchie, of the second part. It provided as follows-"The first party having raised an action against the second party for delivery of the furniture, &c., within the Royal Hotel, Calderbank, and failing delivery, for payment of £100, both parties have agreed in manner following, that is to say-1st, The second party hereby acknowledge that the whole furniture and effects within the said hotel belong to the first party by right of purchase from John M'Queen Barr, trustee in the cessio of the said Rosina Armstrong or Gold, and that he is entitled to take delivery thereof at pleasure. 2nd, The second party agree, whenever they are asked to do so by the first party, to transfer to him the licence certificate and excise licences now held by Mrs M'Latchie in name of Armstrong or Gold. 3rd, The second party William M'Latchie agrees to manage the said hotel at Calderbank for the first party, to render due account of his management,

and pay over the nett drawings to the first party. The said William M'Latchie further agrees to manage the said business in a strict and proper manner, so as not to contravene the Public-Houses Act, or to incur a forfeiture of the licence, and also obey the instructions and orders of the first party. 4th, The first party agrees to pay the said William M'Latchie a wage of 35s. per week. 5th, The first party agrees not to exact or charge rent for the second party's possession of the said hotel from Whitsunday last to the date of this agreement. 6th, The second party agree to account to the first party for the stock in the said hotel as at 16th February 1885, conform to inventory and appraisement by Mr William Burn, auctioneer, Glasgow. In like manner, the first party agrees to pay the second party for whatever surplus of stock there is over and above what is stated in the inventory and appraisement."

The defender's answer was that M'Latchie had not implemented this agreement, and that he did not manage the hotel business for the defender.

He pleaded-"The goods, payment of which is sued for, not having been ordered by the defender, or by anyone for whom he is liable, and not having been delivered to the defender, the defender should be assoilzied, with expenses."

The facts appear from the opinions infra. The Sheriff-Substitute (MAIR) on 7th January 1887 assoilzied the defender with expenses.

"Note.-There can be no doubt from the evidence that the goods furnished by the pursuers to the Royal Hotel at Calderbank, between January and April 1886, were supplied on the credit and responsibility of Mr W. H. M'Latchie, who then occupied the hotel. The goods were ordered by him in his own name, and so delivered to him. They were charged for in the pursuers' books against M'Latchie, and the pursuers knew of no one else in connection with these goods except M'Latchie, who alone was regarded by them as their debtor. They never heard of the defender in connection with the hotel until shortly before the raising of the present action. The pursuers however aver that Mr M'Latchie was the defender's manager, and had the sole charge of the conducting of the business in the Royal Hotel at Calderbank, conform to an agreement between them, and that the manager received the goods, which in the ordinary course of business were sold in the defender's said hotel.' The agreement is in process, and the question now to be determined is, whether at the time the goods were ordered and furnished by the pursuers, M Latchie acted as the defender's manager, under the agreement or whether he was acting for himself. Before, however, adverting to the terms of this agreement, it is important to see the position of matters before it was executed. The defender is the proprietor of the Royal Hotel at Calderbank, and for some years before his brother Andrew's death, three or four years ago, Andrew was his tenant in the hotel, and as such held the hotel licence. The furniture in the hotel, however, belonged to the defender. After the brother's death his widow carried on the business in the hotel, and the licence was taken out in her name. The business apparently did not prosper, and cessio was taken out against Mrs Gold in the

beginning of the year 1885. It would appear that the defender for the purpose apparently of saving his property in the hotel and preventing the hotel as such being ruined, and with a view to the business being still carried on by his sister-in-law, purchased back from the trustee in the cessio the whole of the furniture and effects therein, which the trustee had taken possession of as part of the assets under the cessio. The business was thereafter still carried on by Mrs Gold until she got married to M'Latchie in June or July 1885, after which, although the licence was still in Mrs Gold's name (the year for which it was granted being at the date of the marriage current), the business was carried on by M'Latchie. According to the evidence of the defender he seems after the marriage to have got concerned about the furniture, as there was no written evidence that it was his property, and the agreement before referred to was entered into. It is dated October 1885, and proceeds on the preamble or narrative that the defender had raised an action against M'Latchie and his wife for delivery of the furniture in the hotel, or for payment of £100. The first article of the agreement contains an acknowledgment by M'Latchie and his wife that the furniture and effects belonged to the defender by right of purchase from the trustee in Mrs Gold's cessio, and that he was 'entitled to take delivery thereof at pleasure;' the second, that M'Latchie and his wife agreed, 'whenever they are asked to do so' by the defender, 'to transfer the licence certificate and excise licence now held by Mrs M'Latchie in name of Armstrong or Gold.' The third, that M'Latchie agreed to manage the hotel for the defender, to render due account of his management, and pay over the net drawings to the defender, and to manage the business in a strict and proper manner, so as not to contravene the Public Houses Acts, or incur a forfeiture, and obey the orders of the defender. The fourth, that the defender agreed to pay M'Latchie a wage of 35s. per week. The fifth, that the defender agreed not to exact or charge rent for M'Latchie's and his wife's possession of the hotel from Whitsunday 1885 to the date of the agreement; and the sixth, that M'Latchie and his wife agreed to account to the defender for the stock in the hotel as at 16th February 1885, conform to inventory and appraisement by Mr Wm. Burn, auctioneer, Glasgow, and in like manner the defender agreed to pay M'Latchie and his wife for whatever surplus of stock there was over and above what was stated in the inventory and appraisement. Such are the terms of agreement between the defender and M'Latchie, and if it had been established that it was acted on, the pursuers-notwithstanding that the goods supplied by them were ordered by, and delivered to, M'Latchie-would have been entitled to prevail in the present action. The burden of proof, however, lay upon the pursuers, and in my opinion they have failed to discharge that burden. The agreement itself does not constitute the relationship of principal and agent as one which was to come into existence immediately upon the execution of the agreement. I cannot help thinking that the primary object of the agreement was to preserve evidence that the furniture and effects in the hotel were the property of the defender, and that the secondary object was to put