Farmers' Mart Ltd v Milne
| Jurisdiction | Scotland |
| Judgment Date | 02 December 1913 |
| Docket Number | No. 17. |
| Date | 02 December 1913 |
| Court | Court of Session |
Lord Hunter, Lord Justice-Clerk, Lord Dundas, Lord Guthrie.
ContractPactum illicitumTrustee in bankruptcyAgreement to share fees.
A firm of land-agents agreed with their manager that all fees which he earned from any appointment which he might obtain as trustee or factor on any estate should be pooled with all fees which they derived as salesmen or valuators in connection with that estate, and that the fees so pooled, after payment to the firm of the balance of any debt due to them by such estate, should be divided equally between the parties.
In an action by the firm against their manager to recover, under this agreement, a proportion of fees alleged to have been earned by him as trustee or factor on various estates and, inter alia, as trustee in a sequestration, held (rev. judgment of Lord Hunter) that, although there was no suggestion that the defender had acted improperly in the conduct of his trusteeships, still the agreement necessarily placed him in the position of having conflicting interests, and was therefore illegal and unenforceable, and action dismissed.
On 12th May 1913 the Farmers' Mart, Limited, Brechin, brought an action against John Milne, auctioneer, for an accounting in regard to all fees derived by him between 1st April 1907 and 19th August 1908, as factor or trustee on any estate, and for payment of the proportion of such fees due by him under an agreement between him and the pursuers dated 9th April 1907.
The pursuers averred that they carried on business in Brechin and elsewhere as live-stock salesmen, agents, auctioneers, appraisers, and land-surveyors. The defender was appointed manager of the pursuers' business in 1899, and continued to act as such till 19th August 1908. After 1st April 1907 he was employed on the terms contained in an agreement dated 9th April 1907, to which the pursuers were the first parties and the defender was the second party, and which provided, inter alia:(Fifth) The second party shall be entitled but shall not be bound, to undertake any factorship or trusteeship on, or other office involving the management of, any estate, provided always that before undertaking any such factorship, trusteeship, or office, he shall first obtain the consent of the first parties, unless in the case of a testamentary or other gratuitous trusteeship, executorship, or factorship, any of which he shall be entitled to accept without the consent of the first parties. The fees or other remuneration derived by the second party from any such factorship, trusteeship, or office as aforesaid, accepted by the second party after the commencement of this agreement, shall (after deduction therefrom of all charges and other out-of-pocket expenses incurred by the second party in connection therewith, and that whether by way of legal, clerical, or other assistance or otherwise) be pooled with all fees and commissions, including fees for measurements derived by the first parties from any sales or valuations in connection with any such estate under the management of the second party as aforesaid, and the proceeds thereof shall be divided in the portion of one-half to the first parties, and the other half to the second party, provided always that, before any such division shall take place, there shall out of said proceeds be paid to the first parties the balance of any debt remaining due to them from such estate, after giving credit for all sums received, or falling to be received, on account of such debt, and that whether from the principal or any subsidiary or collateral obligant therefor, or from the respective estate of any such obligants.
The pursuers also averred that between 1st April 1907 and 19th August 1908 the defender had acted as trustee or factor on several estates, and in particular as trustee under a trust-deed for behoof of creditors granted by John Fairweather, and as trustee on the sequestrated estates of Stewart Dick, and that the defender refused to account to the pursuers for the proportion of fees derived from his trusteeships, as he was bound to do under the fifth clause of the agreement of 9th April 1907. There was no averment by either party which suggested that the defender had in any way acted improperly in the discharge of his duties as trustee.
The pursuers pleaded, inter alia;(1) The defender being bound under and in terms of the said agreement of 9th April 1907, and in particular article fifth thereof, to account to the pursuers for all fees or other remuneration derived by him (a) from his said...
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