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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Dickison v. The Scottish Provincial Assurance Co. [1880] ScotLR 18_33 (27 October 1880) URL: http://www.bailii.org/scot/cases/ScotCS/1880/18SLR0033.html Cite as: [1880] SLR 18_33, [1880] ScotLR 18_33 |
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In 1870 D., through his law-agent R., borrowed £1000 from M., on bond and disposition in security over house-property belonging to him. In 1876 R. fraudulently represented that M. desired payment of his money, and under a general authority from D. borrowed £1000 on bond and disposition in security over the same subjects from an Assurance Company, acting as agent for both parties in the transaction. R. thereafter did not pay the money to M., whose bond over D.'s property was not discharged till 1878, when a bond and disposition was granted to him by R.'s partner on the security of his own estate. R.'s firm having become bankrupt, their trustee
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brought a reduction of the bond granted by R.'s partner to M., and of the relative discharge of the bond over D.'s property; this action was compromised on the footing, inter alia, of D. paying £450. D. then brought a reduction of the bond granted by him to the company, and sought to recover the £450 from them. Held that D. having paid the £450 at his own hand, and having given no intimation to the company of the trustee's action or the compromise thereof, had no claim against the company for recovery.
In 1870 Alexander Dickison borrowed £1000, through his agent James Renton jun., of Renton & Gray, S.S.C., from W. Munro, and granted a bond and disposition for the said sum over certain house property belonging to him in Edinburgh. In 1876 Renton falsely informed Dickison that the creditor desired payment of his money, and advised the raising of a new loan on the same security in order to meet his demand. He then, having received a general authority to raise the money, borrowed £1000 from the Scottish Provincial Assurance Company, and procured Dickison's signature to a bond and disposition in security in their favour for that sum over the same subjects, acting in the matter as agent for the company as well as for the borrower. Renton did not, however, at this time pay the money to Munro, or obtain discharge from him of the previous bond. The company regularly received interest on their bond from Renton, and after Martinmas 1878 from Dickison himself. In October 1878 Munro's bond was discharged, and the discharge duly recorded, Mr Gray, Renton's partner, having granted him a bond for £1000 over his own estate. Shortly afterwards Messrs Renton & Gray became bankrupt, and Mr Renton absconded from the country. The trustee on the bankrupt estate brought a reduction of the bond granted by Mr Gray, and of the discharge of the bond granted by Dickison which Munro had executed in 1878. To this action Dickison was a defender; and it was finally compromised on the footing, inter alia, of his paying a sum of £450.
The present action, which was raised by Dickison, concluded in form for the reduction of the bond granted by him to the Scottish Provincial Assurance Company; but it was explained that in doing so he was only desirous of recovering from them the £450 which he had to pay, as he alleged, through the fraud of Renton and the fault of the company.
The pursuer pleaded—“(1) The sum in the said bond not having been advanced, the pursuer is entitled to decree. (2) The execution of the bond having been obtained by the fraud of the agent of the defenders, and without consideration, they cannot insist in the same.”
The defenders pleaded—“(1) The averments of the pursuer are irrelevant and insufficient to support the conclusions of the action. (2) The averments of the pursuer being, so far as material, unfounded in fact, and in particular the pursuer having, by himself or his agent, duly received the proceeds of the said bond, the defenders are entitled to absolvitor. (3) The pursuer's action is, in any view, barred by the discharge of 22d October, and by the settlement of the said action of reduction.”
The Lord Ordinary (
Rutherfurd Clark ), after proof led, assoilzied the defenders.The pursuer reclaimed.
Authorities— Molleson (Renton & Gray's Trustee) v. Smith's Trustees, June 15, 1880, 17 Scot. Law Rep. 648, 7 R. 951; Rose v. Spaven, May 27, 1880, 17 Scot. Law Rep. 583, 7 R. 925; Mair v. Thom's Trustees, Feb. 20, 1850, 12 D. 748.
At advising—
The pursuer Mr Dickison was a client of Renton's, and had a great many transactions with him. He was engaged in certain building speculations, and was in the way of granting bonds over the houses, these transactions being conducted for him by Renton. There was a distinct understanding also between client and agent that when money was received by Renton for his client, it first remained in his hands till it was wanted, and that sort of business transactions continued between them for a number of years. It appears that prior to 1876 there was a sum of £1000 borrowed on the security of house property belonging to Mr Dickison; and in 1876—about July or August—Renton represented to him that the creditor in that bond wanted payment of his money, and told him also that he should procure money from another lender. That this was done to enable Renton to get the £1000 into his own hands is plain enough. Renton was not acting in good faith, but fraudulently. What he did was this—he procured a loan of £1000 from the Scottish Provincial Assurance Company, and procured a bond for that amount to be signed by his client, and delivered the bond to the Assurance Company. In this transaction he appears to have acted for both borrower and lender; the company had no other agent in the matter, and to that extent he acted for them as well as for the borrower. But the borrower was his constant client, and no doubt in going to the company he was acting as the agent of the present pursuer. It is said that the money was advanced by the company a month or two before the bond was delivered to them, and in so doing the company relied on Renton's honesty; but what they relied on was this, that having obtained the money as an advance on the bond, he was to deliver them the bond afterwards; therefore Renton acted honestly enough to them, and they suffered nothing by their trust in him. Having got the money into his hands, Renton put it to the credit of his own bank account, and there it remained, and no steps were taken to procure a discharge of the previous bond, in which he had falsely represented the creditor as demanding payment. But in 1878 Renton procured a discharge of this previous bond from the creditor, and in so doing gave the pursuer the full consideration which the pursuer had stipulated and intended he should receive as consideration for granting the bond to the defenders. The way that the discharge was obtained was this—Renton's partner gave a security to the granter over his estate for a like sum
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As to the other matter, it was argued that the case of Rose v. Spaven did not apply to this case. There are certain distinctions in matters of fact between the two cases, but substantially it appears to me that this was a thing done by Renton on the same lines as in Rose v. Spaven, and the evidence on which the Court proceeded being very much the same as here, I think the defenders are entitled to prevail. I think the evidence of Dickison just shows this, that he speculated with Renton in other matters, and that he put his whole affairs into his hands, signed the bond, and allowed Renton without inquiry to apply the money in any way he thought fit. He thus placed Renton in a position to do as he did, and therefore I am quite satisfied that the pursuer has no case against the defenders.
In the first place, it is, I think, proved that Renton had the authority of the pursuer to borrow £1000 from the company, and as the money was lent, the pursuer must bear the consequences. There was a meeting at which the pursuer expressly told Renton he might borrow £1000 from a lender. The authority was quite general, and having got general authority, Renton applied to the defenders and got the money from them. Now, I am of opinion that if Renton afterwards embezzled the money, it was the pursuer's money he embezzled. It is true that the pursuer gave Renton the authority on a false representation by him, but that was unknown to the company and cannot affect them. Renton cheated the pursuer, but the pursuer gave him the authority on which he and the company acted. Even if there had been no discharge, I should have held that the company were safe in the advance made. It is also clear that for considerably more than two years their fund remained as a standing advance, and interest on it was paid by Renton, and subsequently by the pursuer himself, in the full knowledge of what had taken place.
But, in the second place, the pursuer says he agreed to borrow £1000 only on condition of getting a discharge. He got the discharge, however, not at the time, it is true, but two years afterwards. The condition he desired was fully implemented; it is so stated now on the record; and as in point of fact he got the security he stipulated for, his action fails.
But there is yet a third answer to this claim. The discharge having been challenged, the pursuer compromised the action. It is clear enough that had he defended it he must have been successful. From the reported case of Molleson, decided after the compromise, it is plain that he had a good defence; but he paid a sum of money and made an arrangement by which the discharge should be allowed to stand. I do not say he was foolish in coming to a settlement. I think counsel are often well advised in such cases, particularly when questions of some difficulty are raised, in recommending that each party should put in a sum and make a settlement, all suffering abatement. But then he could only do so on the footing of abandoning any claim against the Assurance Company. He should either have maintained his defence or taken the company with him in the arrangement—at least to the effect of reserving with their consent all claims against them. But he seems to have done neither, and I think it is impossible now to make the company liable.
On these three separate grounds I am of opinion that the defenders in this action are entitled to succeed.
The Court adhered.
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Counsel for Pursuer (Reclaimer)— Wallace. Agents— Welsh & Forbes, S.S.C.
Counsel for Defenders (Respondents)— Guthrie. Agents— Boyd, Macdonald, & Co., S.S.C.