Bellshill & Mossend Co-op. Society Ltd v Dalziel Co-op. Society Ltd

In and for some time prior to the month of October, 1955, two Co-operative Societies, both registered under the Industrial and Provident Societies Act, 1893, were in dispute as to their respective rights of trading in a certain area in the county of Lanark. They were the Appellants, the Bellshill and Mossend Co-operative Society Limited, the original pursuers, whom I will sometimes call "Bellshill", and the Respondents, the Dalziel Co-operative Society Limited, the original defenders, whom I will sometimes call "Dalziel".

Both societies were members of another society called the "Co-operative Union Limited", whose objects were by its Rules stated to be to carry on certain trades and business, amongst them that of "arbiters in matters of dispute arising between societies which cannot be settled locally, and of propagating co-operative principles and ideas, and the organising of co-operative work in all its branches, whether such work be in connection with industries, trades, or business, or for the promotion of education and other objects and purposes of a similar character with a view to the ultimate establishment of a Co-operative Commonwealth." Rule 6 provided that the Union should consist of all Industrial and Provident Societies, Joint Stock Companies and other bodies corporate which had for their object the promotion of co-operative principles and ideas, and were members of the Co-operative Union at the time therein stated or might thereafter be admitted. Rule 9 provided that each applicant for admission should be deemed by such application to accept as the principles by which all its business transactions should be guided—the desire to promote the practice of truthfulness, justice and economy in production and exchange by (amongst other means) preventing the waste of labour now caused by unregulated competition. Rule 10 provided that no society should be allowed to remain in membership with the Union which did not abide by its Rules, conform to its aims and accept the decisions of the Central Executive confirmed by Congress, and that any disagreement that might arise as to overlapping or any other matter which could not be settled in consultation between the parties should, in failure of conciliation, be submitted to persons appointed by the Union as arbitrators and that their decision should be final and binding on all parties. Rule 12 provided that every society should as long as it continued a member of the Union make an annual contribution to the funds of the Union. Rule 15 provided that a society might withdraw from the Union subject to the conditions therein stated, or, if deemed guilty by the Central Executive of conduct detrimental to the Union or to the movement generally, might be excluded from the Union by the resolution of any Congress as therein mentioned.

It is thus clear that membership of the Union was optional and could be terminated at any time either voluntarily or by exclusion.

It is common ground that these Rules were binding on Bellshill and Dalziel as members of the Union. In accordance with them a dispute between the parties in regard to overlapping by Dalziel into the territory of Bellshill was in May, 1955, referred (apparently by the Union) to the arbitration of three persons nominated by the Union who were in fact three of its officials. Both parties appeared in due course before the arbitrators, and on the 6th October they made their award. It was that in relation to the dispute between Bellshill and Dalziel the co-operative service in the Bellshill area should be provided exclusively by Bellshill and Dalziel should not trade in this area from fixed premises therein nor from mobile shops or vans. The Bellshill area was defined. Dalziel did not accept the award and told Bellshill so. They did not observe it, and on the 21st October, 1957, withdrew from membership of the Union, as they were well entitled to do. They continued to trade in the prohibited area.

On the 5th November, 1957, Bellshill commenced the action out of which this appeal arises. By the conclusions of their Summons they sought, first, a declarator that the defenders were bound by the award of the 6th October, 1955; secondly, a declarator that the award prohibited Dalziel from trading in the defined area; and, thirdly, an interdict against...