Tuesday, March 20.

FIRST DIVISION.

BROAD V. THE EDINBURGH NORTHERN

TRAMWAYS COMPANY.

Process-Judicial Factor-Vacation—Companies Clauses Consolidation (Scotland) Act 1845 (8 and 9 Vict. cap. 17), sec. 57.

The powers conferred by the 57th section of the Companies Clauses Consolidation (Scotland) Act 1845 for the appointment of an interim judicial factor, cannot be exercised by the Lord Ordinary on the Bills during vacation.

On 19th March 1888 a petition was presented to the Court by Mr Warrington Evans Broad, the holder of certain mortgages for £3370 and other sums of the Edinburgh Northern Tramways Company incorporated under the Edinburgh Northern Tramways Act 1884, for the appointment of an interim judicial factor upon the undertaking in terms of the provisions of the 56th and 57th sections of the Companies Clauses Consolidation (Scotland) Act 1845.

The 57th section of that Act provides-"Every application for a judicial factor in the cases aforesaid shall be made to the Court of Session, and on any such application so made, and after hearing the parties, it shall be lawful for the said Court, by order in writing, to appoint some person to receive the whole or a competent part of the tolls or sums liable to the payment of such interest, or such principal and interest, as the case may be, until such interest, or until such principal and interest, as the case may be, together with all costs, including the charges of receiving the tolls or sums aforesaid, be fully paid."

It was argued for the petitioner that the decision in the case of the Glasgow, Garnkirk, and Coatbridge Railway Company, May 28, 1850, 12 D. 944, in which it was held that such an appointment could not be made in vacation did not now apply, in view of the provisions of the 4th and 10th sections of the Distribution of Business Act 1857 (20 and 21 Vict. c. 56).

The 4th section of that Act provides (sub-sec. 4) that Petitions and applications for the appointment of judicial factors" should be disposed of before the Junior Lord Ordinary, and the 10th section provides that "the Lord Ordinary on the Bills during vacation shall have the same powers in regard to petitions for the appointment of . . . judical factors as are by this Act conferred in relation thereto on the Junior Lord Ordinary as aforesaid."

The Court held that the provisions of the Distribution of Business Act 1857 could not be held to apply to the present case which involved the exercise of a kind of diligence, but in respect that the company were represented at the bar and gave their consent they pronounced an interlocutor holding intimation and service to be granted as prayed for, and of consent appointed Mr D. N. Cotton to be interim judicial factor. Counsel for the Petitioner-Graham Murray. Counsel for the Respondents-Sir L. Grant. Agents-Graham, Johnston, & Fleming, W.S.

Tuesday, March 20.

OUTER HOUSE.

[Lord Trayner, Ordinary.

HARLEY, PETITIONER.

Judicial Factor-Curator Bonis-CautionerBond of Caution by a Limited Company.

Petition granted in which a curator bonis prayed the Court to authorise the bond or policy of the Sickness and Accident Assurance Association (Limited) to be accepted instead of a bond of caution by a private individual.

James Harley, tailor, Leven, Fifeshire, was appointed, on 25th February 1888, curator bonis to his niece Agnes Elder Scott, and factor loco tutoris to his nephews James Harley Scott and John Lindores Scott.

The petition for the appointment was presented by their mother, their uncle John Scott, and their uncle the said James Harley.

Their father Robert Scott, wine and spirit merchant, 1 Hope Street, Edinburgh, had left moveable property of the value of about £2800, and heritable property of the value of about £2000, but he had died intestate without having made any appointment of tutors or curators to his children, and their mother, who had been appointed executrix-dative qua relict, had an interest in the estate adverse to that of her childen.

By the interlocutor making the appointment the Lord Ordinary (TRAYNER) fixed £3000 as the amount of caution to be found by the factor, and authorised a bond or policy for that amount of the National Guarantee and Suretyship Association (Limited) to be accepted and taken for him instead of a bond by a private individual.

Upon 17th March 1888 the factor presented a note to the Lord Ordinary, in which he stated that the National Guarantee and Suretyship Association (Limited) had declined to grant said bond or policy at a lower rate than 7s. 6d. per cent., or an annual premium of £11, 5s., which would absorb the greater part of his commission, and craved that a bond or policy for the same amount of the Sickness and Accident Assurance Association (Limited), with its head office at 1 St Andrew Square, Edinburgh, which had offered to grant a bond or policy in similar terms to that granted by the said Guarantee Association, or in such other terms as his Lordship might approve, and that at an annual premium of 5s. per cent., or £7, 10s., might be accepted on his behalf.

Authorities cited M'Kinnon, Petitioner, March 8, 1884, 11 R. 676; M'Kinnon, Petitioner, November 26, 1884, 12 R. 184.

The Lord Ordinary remitted the note to Mr John Galletly, S.S. C., to inquire and report.

Mr Galletly reported upon the Sickness and Accident Assurance Association (Limited) as follows:-"The company was incorporated on 17th April 1885 with a subscribed capital of £60,000, consisting of 12,000 shares of £5 each, whereof £1 per share is paid up, leaving an uncalled liability of £48,000. The reporter has gone carefully over the list of shareholders, 340 in number, and considers them a substantial body. There are only two or three holders of large numbers of shares, and these shareholders, so far as the re

In

porter is aware, are men of considerable means, and quite good for any calls that may be made upon them. The directors are gentlemen of acknowledged ability and integrity, one-half of them being personally known to your reporter. The company has not yet been three years in existence, but it already appears to have established a safe and remunerative business. The premium income for last year as shown by the report amounted to over £14,500, whereof upwards of £330 consisted of premiums on guarantee policies. A dividend of three per cent. is payable, to the shareholders within the next few days. The present selling price of the shares (£1 being paid as before mentioned) is about par. addition to the uncalled capital of the company, amounting to £48,000, the policy holders have the further security of the invested funds of the company which amounted at 31st December last to about £6500. The bonds of the company have already been accepted by two Government Boards as guarantee (the Board of Inland Revenue and Local Government Board) for the intromissions of public officers, and also by the Court of Chancery in England, the Probate and Matrimonial Division of the High Court of Justice in Ireland, and by different public boards, school boards, and parochial boards in Scotland. Having been so recently established, the reporter cannot say the company is of equal standing with the National Guarantee and Suretyship Association, whose bonds have been previously accepted by your Lordship, but he has no doubt of the sufficiency of the Sickness and Accident Assurance Association to meet all obligations undertaken by it, and is humbly of opinion that your Lordship may authorise a bond or policy by the company to be accepted on behalf of the curator as craved."

Upon 20th March 1888 the Lord Ordinary (TRAYNER) pronounced this interlocutor:"Authorises a bond or policy for £3000 of the Sickness and Accident Assurance Association (Limited), carrying on business in Scotland, to be accepted and taken for the curator bonis and factor loco tutoris instead of a bond by a private individual."

Counsel for the Petitioner-Lorimer. Agent -George Inglis, S.S. C.

, Petitioner

A complaint was brought on 2nd December 1887 against John Campbell, residing at Kilmuir, Dunvegan, Duirinish parish, Inverness-shire, in the Sheriff Court, Portree, at the instance of Joshua M'Lennan, Procurator-Fiscal of Court. The charge against him was that "having, on the 14th November 1887, within the inn at Dunvegan, found in money one pound, he did deny having found the same, and did appropriate and thus steal the same."

On 9th December 1887 the accused appeared and pleaded not guilty. After evidence had been led, the Sheriff-Substitute (GLEGG) found the accused guilty of the crime of theft as libelled, and sentenced him to be imprisoned for fourteen days.

Campbell appealed to the High Court of Justiciary by case stated.

The Sheriff-Substitute stated that no objection had been taken to the relevancy of the complaint, and that he had found the following facts proved, viz. "That John Campbell, shoemaker, Hamuravven, Glendale, had lost a £1 note on 14th November, which was a public market day. in or about the hotel at Dunvegan; that on the same day the appellant found a £1 note in one of the public drinking rooms of said hotel in which the said John Campbell, with others, had previously been; that the finding of the £1 note had been witnessed by several persons, one of whom asked the appellant to report his having the note; that on 17th November the appellant denied to the said John Campbell having found a £1 note in said hotel on said day; that on the 18th November the appellant denied to one of the witnesses present at the finding that he had found a £1 note on said occasion; that prior to this on said 18th November the appellant's brother-Murdo Campbell had told the said John Campbell that the appellant had found the money; that the appellant never returned a £1 note to Campbell; that on the last mentioned date the appellant's brother Donald Campbell, on hearing that the police were making inquiries into the matter, sent a £1 note by the appellant's son to the said John Campbell."

The question in law for the opinion of the Court was "Whether the facts above stated amounted to the crime of theft?"

At advising

LORD M'LAREN-This is an appeal on a case stated under the Summary Prosecutions Appeals Act 1875, and the question which we are asked to consider is, whether the charge, upon which a conviction has followed, is a relevant charge? The complaint charges the theft of a £1 note, and under the recent statute it seems perfectly clear that a case of that sort might have been tried on a complaint which simply set forth that the accused did steal a £1 note without saying that it was the property of anyone, but it appears to me that on a fair reading of the charge that the Procurator-Fiscal has not availed, or attempted to avail, himself of the forms provided by the new Act, and, on the contrary, that he has in framing the charge preferred to set forth those circumstances of time and place which are essential to the definition of theft. The charge states that the accused "having, on the 14th November 1887, within the inn at Dunvegan, found in money one pound, he did deny having found the

same, and did appropriate and thus steal the same. Now, in my opinion that is not a relevant charge of theft, because everything thus set out might be perfectly true, and yet the accused might not be guilty of theft. I am not prepared to affirm that the mere finding of a £1 note, coupled with a denial of having found it, is conclusive evidence of felonious appropriation. One would like to know who the owner of the note was, and whether the person to whom the accused is said to have denied finding it had a right to ask the question. The circumstances set out are only these two-that the accused found a £1 note, and that he denied having found it. Now, it may be very wrong to deny having found a £1 note; on the other hand, such a denial may be quite innocent.

On the whole matter my opinion is that the Procurator-Fiscal having undertaken to set out such particulars as would necessarily amount to theft has failed to do so, and has instead given an argumentative statement of what he considers would amount to theft, but which, being consistent with innocence, leaves us no security that the accused was rightly convicted. On these grounds I am of opinion that the conviction ought to be quashed.

LORD RUTHERFORD CLARK-I am sorry to be obliged to differ, but I differ entirely. We have here nothing to consider but whether this complaint is or is not relevant. The complaint states merely these two facts-that the accused found a £1 note, and that he appropriated it to his own use. Under the new Act "appropriate" is to be read as "feloniously appropriate," but that really is of no importance, for if a person finds a £1 note, and appropriates it to his own use, I think that is plainly theft, and nothing else.

LORD YOUNG-Your Lordships have differed in opinion, and that, according to the constitution of this Court, gives me a vote.

He

I ventured to point out in the course of the discussion that the charge here is an argumentative charge, and that it is against the rule of our law to state charges argumentatively. It sets out that the accused found a £1 note, that he denied having found it, and that he appropriated it, and the argumentative conclusion from these facts is that he did steal the same. Now, I agree with Lord M'Laren that this conclusion does not necessarily follow from the facts on which it bears to proceed. A man may find a £1 note, and finding it, may deny having done so, and may appropriate it, and yet not be a thief. may be a thief no doubt, but, on the other hand, he may not the conclusion of theft is not the necessary inference. There must be circumstances entitling a jury to attribute to the accused the animus furandi. A man of large property may find money in the street, and may give it in the way of alms to the next beggar; that is undoubtedly appropriation. Yet who would call it theft, even if the finder had denied having found it? His denial may be a very important circumstance, and if the whole other circumstances point to the conclusion of theft, then he may be rightly convicted. Another important circumstance is that the finder knew who the true owner was, but in this indictment it is not suggested to whom the £1 note belonged, or even that the prosecutor

knew to whom it belonged. That is all the more inexcusable here, since according to our lawour common law, and apart from the recent statute the modus of theft does not require to be set out in the indictment. All that our law requires is that the indictment should bear that accused "did steal" the article mentioned. But the particular circumstances being here set outthough insufficiently set out-to warrant the inference of theft, there is or is not an act of theft according to the evidence. I am not prepared therefore to sustain this indictment, and I am the more disposed to take this strict course-if indeed it be a strict course-because I have grave doubts whether this case should ever have been prosecuted. In one sense all crimes are crimes against the public as well as against the individual injured, but where in a case of this sort the individual injured makes no complaint to the authorities, and the friends of the accused come forward and restore what has been taken, it occurs to me that it is not for the public prosecutor to step in and insist in bringing the matter to the test of a criminal prosecution. I think that in cases of this kind-and I do not of course speak of cases of another and more serious description-the public prosecutor ought to act only on the deliberate complaint of the injured

person.

The Court quashed the conviction.

Counsel for the Appellant- J. P. Grant. Agent-Alex. Macdonald, Solicitor, Portree.

Counsel for the Respondent-Rankine. Agent -J. Auldjo Jamieson, W.S., Crown Agent.

HOUSE OF LORDS.

Monday, March 26.

(Before Lord Chancellor (Halsbury), Lord
Watson, and Lord Macnaghten).

UNITED HORSESHOE & NAIL COMPANY

(LIMITED) V. STEWART & COMPANY. Patent-Damages-Infringement.

In an action of damages brought by a company engaged in the manufacture of horseshoe nails against another company engaged in the same manufacture for damages caused by the defenders' infringement of patents belonging to the pursuers for improvements in the mechanism used in the manufacture, the defenders admitted that certain boxes of nails, manufactured and sold by them, had been made by means of machines which in a previous action had been held to be in certain small particulars infringements of the pursuers' patents. The defenders led evidence to show that the pirated portions of the mechanism were not essential to the manufacture of the nails, and that without using these portions they could have made the nails as well, and almost if not quite as cheaply as with them.

Held (rev. judgment of First Division) that the amount of damages did not fall

The pursuers appealed.

At delivering judgment

LORD CHANCELLOR-My Lords, no question arises in this case as to the title of the pursuers to recover against the defenders a judgment for such an amount of damages as the pursuers can establish to have been sustained by the infringement of the patent right whereof the pursuers are possessed.

I am unable to follow the object of the minute and very careful examination which has been made by some of the learned Judges below as to the particulars of the patent or patents that have been infringed.

The actual infringement complained of consists in the sale of cases of nails produced by patent machines which are admitted to be infringements of the pursuers' patents. Every nail thus produced was an infringement of the pursuers' patent, the sale of which could have been interdicted, and would give a right of action against all concerned in its production and sale.

The question' appears to me to arise solely on the assessment of damages. But I think the admissions in this case render unnecessary and indeed irrelevant an examination into the various parts of the patents.

The cases of nails tales quales were infringements, and in so far as those nails, such as they were, interfered with the sale of the pursuers' own goods, they were properly the measure of the damages which the pursuers were entitled to obtain. I say so far as they interfered with the sale of the pursuers' own goods, and while I agree with the Lord Ordinary that the pursuers can only recover compensation for the actual loss which they have sustained, the estimate of the particular sum which is to be arrived at when assessing compensation for the injury is purely a matter for a jury, and can rarely be made the subject of exact arithmetical calculation.

I am satisfied, however, that the boxes and cases of nails sold by the defenders did in fact interfere with the pursuers' sile. I am unable to agree with Lord Adam that there is nothing in the proof to show or make it probable that the pursuers would have made these sales. I do not say all these sales. I think there is considerable evidence to show that purchasers generally would have sought that particular nail, and I do infer that the pursuers, but for the intervention of the defenders, would have effected a large part of the sales. And I certainly find from the evidence that among the competing nails in the market

26, 1888

they were not all equally sought after, but that the pursuers' nails had a higher reputation. I think it is nothing to the purpose to show, if it is shown, that the defenders might have made nails equally good and equally cheap without infringing the pursuers' patent at all. I will assume that to be proved, but if one assumes that the nails which were in fact made by the pirated machines injured the pursuers' sales, what does it matter if it is ever so much established that the loss which the pursuers have sustained by the unlawful act of the defenders might also have been sustained by them under such circumstances as would give the pursuers no right of action.

Your Lordships have to deal with the facts as they exist, and those facts, as I say, are that the defenders have in derogation of the pursuers' rights sold cases of nails which they had no right to sell, and for which, to the extent to which they have interfered with the sale of the pursuers' patented nails, the pursuers are entitled to damages.

The difficulty I have had in the conclusion at which one should arrive in this case consists in this, that while the only ground upon which I can suppose the judgment appealed against could be supported would be that there was a bare infringement of right without any proof of damages, the judgment for £50 appears to me not to be reconcileable with the idea of nominal damages. And the judgment of the Lord Ordinary, with which I concur, that the pursuers were entitled to recover substantial damages hardly appears to me adequately to represent the amount of damages which the learned Judge held to be proved. In short, the judgment of nominal damages results in a judgment for damages that are not nominal, and the judgment for substantial damages results in a judgment for damages which are hardly substantial. But I so far agree with the Lord Ordinary that in arriving at the exact figure it is extremely difficult without further materials to arrive with any confidence at a different sum to that which the Lord Ordinary has assessed. I have come to the conclusion therefore that I must treat the question as treated by the learned Judges below, as being a question between substantial and nominal damages, and if the former, then to restore the judgment of the Lord Ordinary, even as to amount, though with some hesitation, for the reason I have indicated, as to whether the precise amount arrived at is that which a very minute examination of the evidence would altogether justify.

I therefore move your Lordships that the interlocutor appealed from be reversed, and that the judgment of the Lord Ordinary be restored, but inasmuch as the litigation has resulted in a restoration of the judgment arrived at by the Lord Ordinary, and as the appellants were those who first appealed against that judgment, I think there should be no costs beyond the costs originally incurred-that is to say, that the appellants should have the costs of the proceedings before the Lord Ordinary, but not further.

LORD WATSON-My Lords, the appellant company sell through their agents John Donald & Son, of Glasgow, horseshoe nails made at their works in Sweden, and for the purposes of their

Horseshoe & Nail Co.

26, 1888

manufacture they retain the exclusive use of two patents for improved machinery, to which they have acquired right by assignment. Messrs Kollen, who are also nail manufacturers in Sweden, between February 1883 and March 1885, supplied the respondents 6215 boxes, each containing 25 lbs. weight of horseshoe nails produced by machinery which violated the appellants' patent rights, and of these 5752 boxes were sold by the respondents before the 20th March 1885. On that date the appellants obtained a decree interdicting the respondents from selling or using any horse-shoe nails made in accordance with the patents. The respondents thereupon ceased to sell the nails in question.

The present action was brought by the appellants for damages in respect of injury to their trade occasioned by the competition which they encountered in the Scotch market from the nails illegally sold by the respondents. They allege that their average sales were thereby diminished, at least to the extent of the 5752 boxes actually sold by the respondents, that they were compelled to dispose of their own nails at lower prices than they would otherwise have obtained, and that notwithstanding the withdrawal of the interdicted nails from the market, their trade will not recover its former position, either as regards extent of sales or prices, for a considerable time. The respondents do not impeach the decree of interdict which is now res judicata, but they maintain that this is a case of damnum sine injuria, and that the appellants can only recover nominal damages.

The Lord Ordinary (Kinnear) after a proof had been taken before him, assessed the damages at £530. The appellants being dissatisfied with the sum awarded them presented a reclaiming-note, of which the respondents likewise availed themselves, the result being that the Judges of the First Division unanimously altered the Lord Ordinary's interlocutor, and reduced the damages to £50.

It is hardly disputed that as a matter of fact the sale of the respondents' nails, which were known as the shoe brand, did interfere with the appellants' sale of their globe nails manufactured by their patent machinery. The goods were of much the same quality, and the respondents' own witnesses state that they were in the habit of purchasing whichever of the two nails was at the time the lowest priced. The evidence of Mr Lamb, the respondents' traveller, shows that their goods were in constant and direct competition with those of the appellants. On one occasion he had to discontinue his attempt to sell his shoe brand in consequence of a recent reduction in price of the globe nails, and he accordingly communicated with the respondents, and got a reply to sell at the same price as the "globe." It is also established that the appellants' sales, which in 1882 had reached an average of 1268 boxes per month, were reduced during their two years of competition with the shoe nails to a monthly average little exceeding 1000 boxes, which were disposed of at lower prices than they had previously been able to obtain.

These are

facts which prima fucie entitle the appellants to substantial and not merely to nominal damages. The grounds upon which the learned Judges of the First Division have held that only nominal damages are due appear to be these, that the

VOL. XXV.

Messrs Kollen in the manufacture of the shoe brand nails used a very inconsiderable part of the appellants' patents, and that if they had not infringed at all they would still have produced nails of the same class which would have competed as successfully with the appellants' goods as the nails which they illegally sold.

Lord Adam, who delivered the leading judgment, said "On the whole matter I have come to the conclusion that if the patent is used exactly as described in the letters-patent no saving is effected but the reverse, and that in my view the saving is so immaterial that I have no doubt the defenders without its use would still have manufactured their nails and competed with the pursuers just as they are doing now." The Lord President and Lord Mure concurred in the views expressed by Lord Adam. Lord Shand was of opinion that it had not been shown that the adoption of the parts of the respondents' patents was of material advantage to the appellants, and that had the interdict been granted at the date when that process was brought into Court, and the invasion of the patents then discontinued, the respondents would have been in the market "as competitors all the same with nails in all respects the same, but manufactured without the use of the parts of the patents already noticed."

Towards the close of his judgment Lord Adam expresses the opinion that the appellants were entitled to the profits derived from the illegal use of their patents, and cites a decision of the Supreme Court of the United States (Newry v. Whitney, 14 Wallace's Rep. 620) to the effect that the measure of profits recoverable is the saving in the cost of manufacture effected by such use, and it is on that footing apparently that his Lordship arrived at the estimate of £50. Lord Shand adopted the same principle, which is manifestly erroneous. It was held by this House in Neilson v. Betts, 5 Eng. & Ir. App. 1, that a patentee cannot claim both profits and damages, but must choose between them, and the appellants have made their election by raising the present action.

When a patentee elects to claim the profits made by the unauthorised use of his machinery it becomes material to ascertain how much of his invention was actually appropriated in order to determine what proportion of the net profits realised by the infringer was attributable to its use. It would be unreasonable to give the patentee profits which were not earned by the use of his invention, but the case is altogether different when the patentee of machinery who does not grant licences claims damages from an infringing manufacturer who competes with him by selling the same class of goods in the same market. In that case the profit made by the infringer is a matter of no consequence. ever large his gains, he is only liable in nominal damages so long as his illegal sales do not injure the trade of the patentee, and however great his loss he cannot escape from liability to make full compensation for the injury which his competition may have occasioned. Every sale of goods manufactured without licence by patent machinery is and must be treated as an illegal transaction in a question with the patentee, and its inherent illegality is not affected by the circumstance that the infringement consisted in using

How

NO. XXIX.