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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Macphail v. Lamson Paragon Supply Co. [1913] ScotLR 20 (29 October 1913) URL: http://www.bailii.org/scot/cases/ScotCS/1913/51SLR0020.html Cite as: [1913] ScotLR 20, [1913] SLR 20 |
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A manufacturing company sued a commercial traveller for the amount of certain moneys which the company alleged the traveller had failed to account for, and founded on a letter under the hand of the traveller acknowledging his indebtedness for the sum sued for, and expressing gratitude for the kindness of the company in not prosecuting him. The defender pleaded pactum illicitum, averring that the pursuers had threatened him with a criminal prosecution unless he signed the acknowledgment.
The Court granted decree for the sum sued for, holding that the defender had not relevantly averred an agreement to refrain from prosecution.
Opinion reserved ( per Lords Dundas and Guthrie) as to whether an agreement to refrain from prosecution amounts to a pactum illicitum.
Opinion ( per Lord Salvesen) that where an employer makes a bargain with an employee not to prosecute him for embezzling money provided only he returns it, such a bargain is not a pactum illicitum.
Ferrier v. Mackenzie, February 22, 1899, 1 F. 597, 36 S.L.R. 421, commented on.
Observations ( per Lord Dundas) on the plea of irrelevancy by a pursuer in an action.
The Lamson Paragon Supply Company, Limited, London, pursuers, brought an
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action against Campbell D. Macphail, commercial traveller, Glasgow, defender, for payment of the sum of £110, 8s. 8d. The pursuers averred, inter alia—“(Cond. 2) For a number of years prior to 1908 the defender was a commercial traveller in the pursuers' employment. In 1908 he was sent by the pursuers on a journey to the West Indies, in the course of which he collected accounts due to the pursuers by certain of their customers to the amount of £110, 8s. 8d., and, without authority from the pursuers, retained and used the same for his own purposes, and failed to pay the amount thereof to the pursuers as he ought to have done. On account of this the pursuers proposed, in November 1908, to discharge the defender from their employment, but on his granting to the managing director of the pursuers a letter acknowledging that he had so acted, and had so appropriated to his own uses money belonging to the pursuers to the extent foresaid, and on his agreeing to make repayment thereof, the pursuers retained him in their employment. The letter above referred to is in the following terms:—… ‘Dear Sir—I beg to acknowledge the fact that I have used the company's money in my recent journey to the West Indies to the extent of £110, 8s. 8d., having collected the accounts enumerated hereunder on behalf of the company.’ [Then followed a list of accounts, amounting in all to £110, 8s. 8d.] ‘I beg to assure you that the foregoing names and amounts cover all the accounts collected, and that I have not pledged the company's credit in any way, nor personally have I borrowed any sum or sums from customers or others. I now appreciate the seriousness of my conduct in collecting this money and using it for my own purposes without your authority, and I beg to express to the directors my gratitude for their kindness in not prosecuting me. I agree to pay back the sum owing as quickly as possible out of my commission account, and you are at liberty to so apply commissions to such extent as you consider proper.—Yours faithfully,
‘ C. D. Macphail.’
(Cond. 3) On the day following that on which the said letter was granted, namely, on 20th November 1908, the defender further granted to the pursuers a document of debt in the following terms, namely—‘London, 20 th November 1908.—I promise to pay on demand to the Lamson Paragon Supply Company, Limited, or order, the sum of one hundred and ten pounds, eight shillings and eightpence value received.— C. D. Macphail, Avoca, Silverdale Avenue, Westcliff-on-Sea.’”
The defender averred, inter alia—“(Ans. 2 and 3) Admitted that the defender was in pursuers' employment as a traveller for seventeen years, that he went to the West Indies on pursuers' behalf, and that he signed the alleged letter and promissory-note condescended on. Quoad ultra denied. Explained and averred that the journey to the West Indies proved more costly than either pursuers or defender anticipated, and that the allowances made by the pursuers to the defender for travelling and other expenses were totally inadequate. The expenses necessarily incurred by the defender exceeded the allowance made by the pursuers by the sum of £112, 10s., an amount in excess of the sum alleged to have been collected by the defender on pursuers' behalf. When defender returned after a five months' journey he advised pursuers of the extra expense incurred by him on pursuers' behalf, and explained that no sum was due by him to them. The pursuers, however, without making any inquiries, refused to accept his explanations and declined to admit liability for his expenses, and charged the defender with embezzlement, and threatened him with a criminal prosecution and imprisonment unless he would (first) sign an agreement to remain in their service, and in the event of his leaving their service not to engage in the service of other firms in Great Britain for three years there after; (second) an acknowledgment that he had embezzled, and (third) a promissory-note for £110, 8s. 8d. sterling. The defender protested, but the pursuers repeated their threats of a criminal prosecution and imprisonment, and induced the defender through fear thereof to sign (1) a memorandum of agreement dated 20th November 1908, (2) the alleged letter of 19th November 1908, and (3) the alleged promissory-note. The defender was terrorised by the threat of a criminal prosecution and imprisonment, and his signature to the said documents was extorted from him by fear. No consideration was given by the pursuers for said documents, but the pursuers hoped to obtain the advantage of retaining him permanently in their service by endeavouring to exclude him, if he should leave their employment, from following the only occupation with which he was acquainted.”
The pursuers pleaded, inter alia—“(1) The defences being irrelevant, should be repelled.”
The defender pleaded, inter alia—“(6) The alleged documents of debt having been granted for an illegal consideration, or without any consideration, the defender is not liable in respect of any liability alleged to be constituted thereby.”
On 18th October the Lord Ordinary ( Hunter), having heard counsel for the parties in the procedure roll, decerned against the defender in terms of the conclusions of the summons.
Opinion.—[ After narrating the facts and dealing with certain contentions of the defender with which this report is not concerned]—“The other way the case was presented was this. Mr Jamieson said—Assume that my client embezzled the money, this letter is an agreement to compound a felony, and you cannot therefore sue upon it, because the agreement is in the nature of a pactum illicitum. In the course of his argument he cited certain English cases. Mr Lippe referred me to three cases which I think have a bearing upon this matter. In the first place, there is a case of Ferrier v. Mackenzie, where in somewhat similar circumstances a plea
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that an agreement was a pactum illicitum was repelled and certain remarks were made with reference to what amounts to pactum illicitum. But in the English cases, namely, Ward v. Lloyd, 7 Scott, N.R. 499, and Flower v. Sadler, (1882) L.R., 10 QBD 572, I find statements made by the English Judges as to the circumstances in which a plea founded upon such an alleged pactum illicitum may be sustained, and applying what was said by the Judges there I think it is perfectly clear that there is no relevant averment of such an agreement here. In the case of Flower Lord Coleridge said this—‘A creditor may use strong expressions and even threats; and it was held in Ward v. Lloyd that strong language is not conclusive evidence of an agreement to compound a felony or to stifle a prosecution.’ He also referred to a statement made by Tindal, C.J., in delivering the judgment of the Court of Exchequer Chamber in a previous case, where he said—‘We have no doubt that in all offences which involve damages to an injured party for which he may maintain an action, it is competent for him, notwithstanding they are also of a public nature, to compromise or settle his private damage in any way he may think fit.’ Looking to the pleadings of the defender, I do not think that there is any averment to the effect that there was an agreement not to prosecute. The letter itself does not bear to be an agreement not to prosecute, and the averments amount merely to this, that there was a threat to prosecute, and a repetition of the same threat.
On the whole matter, I am of opinion that the averments of the defender are irrelevant, and that the pursuers are entitled to decree as concluded for.”
The defender reclaimed, and argued—The defender had not embezzled the money, but assuming that he had done so, the acknowledgment of indebtedness granted by the defender could not be founded on by the pursuers. The pursuers had coerced the defender into a bargain whereby they on their part undertook to abstain from prosecuting him on condition that he on his part granted the acknowledgment of indebtedness. But a bargain of that sort was a pactum illicitum, and all obligations arising out of it were null and void. It made no difference whether the bargain was to suppress a prosecution or, as was the case here, to abstain from instituting proceedings—Bell's Prin., sec. 41; Ferrier v. Mackenzie, February 22, 1899, 1 F. 597, 36 S.L.R. 421; Kennedy v. Cameron, February 7, 1823, 2 S. 192. In England it was a crime to compound a felony— Flower v. Sadler, 1882, 9 Q.B.D. 83, affd. 10 QBD 572; Williams v. Bayley, 1866, L.R., 1 HL 200; Ward v. Lloyd, 1843, 7 Scott N.R. 499—and in Scotland the law was the same. The averments of a pactum illicitum need not be express— Keir v. Leeman, (1846) 9 Q.B. (Ad. & E.) 371—and in the present case the defenders had sufficiently averred a pactum illicitum, inasmuch as he averred that there was a threat to prosecute, and that his granting the acknowledgment of indebtedness was the outcome of the threat.
Counsel for the respondents were not called upon.
There is one point of a separate nature on a matter of pleading. I am surprised to notice that the pursuers' first plea-in-law in this record is that the defences are irrelevant. Now that is bad pleading. We sometimes see it in records from the Sheriff Court, but I confess I am surprised to see it in a record presumably drawn by learned counsel. The plea of relevancy may properly be put in the forefront by a defender, but it surely cannot, in logic or in substance, form the first plea or the principal ground of judgment for a pursuer. He must state or plead a prima facie case apart from anything that is to be said against it. I merely call attention to this because I think it is bad pleading, and hope it will not become common.
I move your Lordships that the Lord Ordinary's interlocutor be adhered to.
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But then it is said—and this also involves an admission of the collection of these accounts—that in consequence of what the defender had done in appropriating these sums to his own purposes he was threatened with a criminal prosecution for embezzlement, and through fear of a criminal prosecution was induced to sign this acknowledgment. It is further said that the acknowledgment is accordingly tainted, and being the result of a pactum illicitum cannot be founded upon. Speaking for myself, I doubt very much whether it is a crime by the law of Scotland for an employer to say to an employee who has embezzled his money, “If you will make up the amount which you have taken from me I will not prosecute you.” I do not think it is reasonable to suggest that that constitutes a crime, whether you give it the name of compounding a felony or whatever name you give it. It seems to me that an employer who takes that line acts humanely and is not acting wrongly, far less criminally. The crime that has been committed has injured the employer only, and there is no duty laid upon him in the public interest to give information to the police. But it is not necessary to decide that in this case. It may be a different matter if the employer, using his knowledge that a crime has been committed, gets some benefit to himself—extorts something from the employee to which he is not entitled. That would present an entirely different case to my mind. But that is not the allegation here, and such a defence, as your Lordship in the chair has pointed out, can only arise if there is a relevant averment of an agreement on the part of the employer in respect of certain pecuniary considerations not to prosecute at all. Now I fail to find any proper averment of such an agreement. It may be that in the present case it was the expectation of the employee and the intention of the employer that there would be no prosecution, but in order to make a pactum illicitum there must have been a definite bargain to that effect, and I do not find that there is any proper averment of such a bargain. The circumstances here averred, indeed, seem to me to fall short of what was proved in the case of Ferrier v. Mackenzie, where it was held that a bargain bad not been established so as to bring into operation the law which exists in England—whether it exists in Scotland or not is still an open question—with regard to compounding a felony. It is certainly a remarkable circumstance that a prosecution for the crime of compounding a felony has never, so far as we know, taken place in Scotland, and there are excellent reasons why, in a country where the conduct of the prosecution of crimes is entrusted to a public prosecutor, it should not be necessary to create a more or less artifical crime the purpose of which in England seems to be to stimulate the activities of private prosecutors. But I say nothing further on this subject.
I agree generally with the grounds upon which the Lord Ordinary has decided the case, and with these additional observations which your Lordship in the chair has made.
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It seems to me that the Lord Ordinary has come to the right conclusion when, without finding it necessary to decide the general question, he has held that, supposing such an agreement would have the effect contended for by Mr Macquisten, no such agreement has been relevantly averred.
The
The Court adhered.
Counsel for the Reclaimer (Defender)— Macgregor— Macquisten. Agents— Hume, Macgregor, & Company, S.S.C.
Counsel for the Respondents (Pursuers)— Horne, K.C.— Lippe. Agents— W. & J. Burness, W.S.