Clough v. London and North Western Railway Co.

1871

the company, returned them the goods. No act avoiding the contract on the ground of fraud was done by the company until plea in this action.

The plaintiff having brought an action against the defendants for the goods, the defendants pleaded fraud in Adams, to which the plaintiff was privy. At the trial, the jury found that Adams obtained the goods with the intention of not paying for them; that the plaintiff had advanced to Adams a sum of 250%. (out of which the 681. was paid), but that the advance was not bona fide; and that at the time he advanced it he knew of the fraudulent intention of Adams. The judge directed a verdict for the defendants with leave to amend; and with leave to the plaintiff to enter the verdict for him for 205l., if the Court should think that the defendants were not entitled to the verdict, either on the pleas as they stood, or upon any possible amendment thereof.

The Court below having made absolute a rule obtained by the plaintiff to enter a verdict for him :

Held (reversing the judgment of the Court below), that the defendants were entitled to retain their verdict; for that an equitable plea would be good which stated that the goods had been sold to Adams and delivered by the company to the defendants for the purpose of being delivered to the plaintiff under a contract induced by the fraud of Adams, to which the plaintiff was privy; that the company, under a mistaken supposition that the transitus was still subsisting, obtained from the defendants the re-delivery of the goods to them, which was a breach of the contract between the defendants and the plaintiff; but that afterwards, and after action commenced, the company having discovered the fraud, and that the plaintiff was privy to it, did elect to rescind the contract, and revest the property in the goods in themselves, and that this was done before any act was done by them affirming the contract, or otherwise determining their election; that no interest had vested in any innocent person rendering it inequitable or unjust to rescind the contract; and that the plaintiff was inequitably proceeding with the suit for the purpose of obtaining in damages from the defendants on the record and the company, who were the real defendants, the value of the goods thus revested in the company.

Held, also, that, although in an action by Adams against the company it might *have been necessary in pleading a similar plea to have brought into court [27 the money paid by him to them, it was not necessary in this action either to bring the money into court, or to aver readiness and willingness to return the money, inasmuch as Adams was not a party to the action.

APPEAL from the decision of the Court of Exchequer making absolute a rule obtained by the plaintiff to enter a verdict for him.

June, 18, 19. Quain, Q.C. (Pike with him), for the defendants cited Campbell v. Fleming (1), Clarke v. Dickson (2), Stevens v. Austin (3), 2 Parsons on Contracts, 277, and Belshaw v. Bush.(4) Simon, Serjt. (R. G. Williams with him) for the plaintiff, cited

() 1 Ad. & E. 40.

() E. B. & E. 148; 27 L. J. (Q.B.), 223.

1871

Clough v. London and North Western Railway Co.

Newnham v. Stevenson, (1), Deposit & General Life Assurance Company v. Ayscough (2), Bulch-y-Plum Lead Mining Company v. Baynes (3), Pease v. Gloahec.(*)

The facts, pleadings, and arguments are fully stated in the judgment of the Court. Cur. adv. vult.

Dec. 2. The judgment of the Court (Byles, Blackburn, Mellor, and Lush, JJ.). (5) was delivered by

MELLOR, J. This is an appeal from the judgment of the Exchequer making absolute a rule to enter the verdict for £205 in pursuance of the leave reserved at the trial.

To make the case intelligible it is desirable to call attention to the dates. The writ in the action was issued by the plaintiff' Clough on the 2d of June, 1868, against the London and North Western Railway Company, who are the defendants on the record. The London Pianoforte Company, who are the parties really interested, and who have indemnified the defendants on the record, appeared in their name.

The declaration was delivered on the 30th of June, and con28] tained *three counts; 1st, trover; 2d, a count against the defendants as warehousemen; 3d, a count against them as carriers.

The pleas, as the record stood when the trial came on before Mr. Justice Lush, were seven in number; 1. to 1st count, not guilty; 2. to the same, not possessed; 3. to 2d and 3d counts, non-assumpsit; 4. to 2d and 3d counts, that the plaintiff did not deliver nor defendants receive the goods for the purposes alleged; 5. to the 3d count, that the goods were sold to Adams on credit; that he was insolvent, and that the vendors stopped the goods in transitu; 6. to the 3d count, that Adams, by fraud, induced the London Pianoforte Company to part with the possession of the goods, and deliver them to the defendants as carriers, to deliver them to the plaintiff as agent for Adams, and that the London Pianoforte Company, before any breach of was argued, but before judgment was delivered he had quitted the Court of Common Pleas upon being appointed a member of the Judicial Committee of the Privy Council.

(1) 10 C. B. 713; 20 L. J. (C.P.), 111. (2) 6 E. & B. 761; 26 L. J. (Q.B.), 29. (3) Law Rep. 2 Ex., 324.

(1) Law Rep. 1 P. C., 219.

() Montague Smith, J., was also a member of the Court when the case

Clough v. London and North Western Railway Co.

1871

contract by the defendants on the record, stopped the goods whilst in transitu. Lastly, 7. to the 3d count, a plea similar to the 6th, except that instead of alleging that the plaintiff was the agent of Adams, it averred that the plaintiff was privy to the fraud of Adams.

The replication took issue on all these pleas, and also replied to the 5th plea, that there was a bonâ fide assignment by Adams to the plaintiff for value.

Issue was joined on this replication.

There were also demurrers with which neither the judge at nisi prius, nor we who are now sitting as judges on an appeal, have anything to do.

Those issues came on to be tried at nisi prius before Mr. Justice Lush, on the Winter Circuit of 1868, and evidence was given, and to some extent there seems no dispute as to what was proved.

On the 18th of May, 1866, the London Pianoforte Company made a contract with Adams, by which they sold him nine pianofortes, which he stated he was purchasing for exportation, for the price in all of 205l. Adams paid them in cash 687., and accepted a bill at four months for 1351. 88., which, together with a small discount of 1l. 12s., represented the whole price. The London Pianoforte Company gave him a receipt, and received his directions to forward the pianos by rail to R. C. Clough, Temple Court, Liverpool, who, Adams stated, was his shipping agent.

The London Pianoforte Company sent them accordingly by the *London and North Western Railway Company, ad- [29 dressed as directed, and they arrived at Liverpool. Clough was not found at the address given, and the London and North Western Railway Company, on the 21st of May, wrote to the London Pianoforte Company, stating that this was the fact, and requesting their directions. Almost at the same time the London Pianoforte Company received information that Adams was a bankrupt; they at 9.30 A.M. on the 22d of May, sent directions to the London and North Western Railway Company in London to stop the goods in transitu; but the London and North Western Railway Company did not forward this notice to Liverpool by telegraph, and before this intimation arrived at Liverpool by train, Clough, the now plaintiff, had called at the

1871

Clough v. London and North Western Railway Co.

Liverpool station of the London and North Western Railway Company, and enough took place between him and the London and North Western Railway Company to put an end to the transitus, the London and North Western Railway Company agreeing with him to hold the goods no longer as carriers, but as warehousemen, for him.

The London Pianoforte Company, nevertheless, required the London and North Western Railway Company to send the pianos back to London to them, and the London and North Western Railway Company, on receiving an indemnity from them, did so.

The London Pianoforte Company, on the 23d of May, wrote to Adams, informing him that Clough had not been found at his address, and telling him that they had in the mean time ordered the pianos back until they heard from him.

On the 27th of May, the plaintiff demanded the pianos from the London and North Western Railway Company, and heard that they had been returned to the London Pianoforte Company. On the 2d of June the plaintiff Clough issued the writ against the London and North Western Railway Company.

Up to this time it is clear, as a matter of fact, that the London Pianoforte Company were treating the contract as an existing one, and were relying on their right to stop in transitu; but there is nothing whatever to show that they were as yet aware that the contract was one which had been induced by fraud, so as to give them a right to avoid it on that ground.

But at the trial they succeeded, on the cross-examination of 30] *Clough and Adams, in making out a strong case to go to the jury that Adams, who had just been discharged from prison as a bankrupt suing in formâ pauperis, went to London with the plaintiff on a concerted plan to obtain the pianos without paying for them, in order that Clough might sell them by auction and obtain the proceeds, and that the 681. was in fact Clough's money, advanced for the purpose of carrying out the fraud, and that a document given in evidence, by which Adams acknowledged to have received 250l. as an advance on the pianos, was a part of the fraud.

The pleas as to stoppage in transitu were not abandoned by the defendants, but insisted upon. Mr. Justice Lush most properly ruled that the evidence showed that the transitus was ended before the stoppage.

Clough v. London and North Western Railway Co.

1871

The case then goes on to state as follows:- "The plaintiff's counsel then took the objection that the 7th plea, which set up the plaintiff's privity with Adams' Fraud, was pleaded to the 3d count of the declaration, which was against the defendants as carriers, and that there was no similar plea to the 2d count, which was against the defendants as warehousemen."

The defendants' counsel asked leave to amend, which was granted, Mr. Justice Lush holding that it raised no new question, but merely set the pleas right to raise the question which the parties came to try, and that such amendment was necessary to raise the real question at issue between the parties.

Mr. Justice Lush left three questions to the jury, viz. : — 1. Did Adams obtain the goods with the intention of not paying for them? 2. Did Clough in fact advance the 250l.? Did he at the time he advanced it know of the frandulent intentions of Adams?

The jury answered the above questions as follows:- To the first: He did. To the second: He did, but not bonâ fide. To the third: Yes.

Upon these findings a discussion followed with respect to the pleadings; and ultimately Mr. Justice Lush directed that the verdict should be entered for the defendants, the pleadings to be taken as amended; but if the Court should think that the defendants were not entitled to the verdict, either upon the pleas as they stood, or upon any possible amendment thereof, then the verdict to be entered for the plaintiff for 205l.

*It is stated in the case that the bill and the 681. re- [31 mained, and still remain, in the possession of the London Pianoforte Company. Adams never demanded the return of either, nor did the Pianoforte Company ever offer to return them. It is to be observed that neither in the pleas, as they stood before the leave to amend was given, is there any averment that the defendants were ready and willing to restore the 681., nor in the replication is there any averment that the defendants still retained the money, though Adams claimed it. And we learn from Mr. Justice Lush that nothing whatever was said by either party, either on the examination of their witnesses, or in their addresses to the jury, on this point, or he would certainly have taken the opinion of the jury on it.

There can be no doubt, as Adams was there present giving