Gordon v Pym
| Jurisdiction | England & Wales |
| Judgment Date | 09 December 1843 |
| Date | 09 December 1843 |
| Court | High Court of Chancery |
English Reports Citation: 67 E.R. 364
HIGH COURT OF CHANCERY
[223] gordon v. pym. Nov. 24, Dec. 9, 1843. The Defendant, who was a customer of and had an account with a bank, was also-employed by the bank to raise money on certain Spanish bonds, which he accordingly did; the money being afterwards recalled by the mortgagees, and not paid, th& bonds were sold ; and the Defendant received the balance, and retained it, without the knowledge of the bank. On a bill filed on behalf of the bank for payment of this balance, and also for a general account : Held, that, although the Defendant, by his answer, said the result of the general account when taken would be in his. favour, yet he was not entitled to withhold payment of the balance received by him in respect of the bonds until the general account should be taken ; and a decree for payment of that balance and interest was accordingly made, and also the decree for taking the general account. A banking company, who were mortgagees of certain Spanish bonds, employed tha Defendant to raise money upon them by deposit in his own name : the party with whom the Defendant deposited them called on the Defendant for repayment, and, on default, sold the bonds, with the concurrence of the Defendant, without the, knowledge of the company, and paid the balance of the proceeds to the Defendant.. 3 HARE, 224. GORDON V:. PYM 365 The company was afterwards compelled by their mortgagor to replace the bonds or their value. Held, that the Defendant was answerable to the company for the market price of the bonds at the time of the actual sale, and that he was not answerable for the value of the bonds at any other time. The Plaintiffs, who claimed as trustees of a dissolved banking company, and were proved to have been partners in the company: Held entitled to sustain a suit, as representing the company, against a Defendant who had been in the habit of transacting business with the company, and had dealt with the trustees in that character, and by his answer to the suit made no positive suggestion that the Plaintiffs did not sufficiently represent the company. A few of the partners, in a company consisting of more than one hundred and fifty personsj held entitled to sue on behalf of the whole, to recover a debt due to the company. The Plaintiffs and other persons, upwards of one hundred and fifty in number, were partners in a joint stock company, called the "British and Australasian Bank." The company was dissolved in December 1840, and the Plaintiffs, being five of the partners, were, at a general meeting of the shareholders, appointed trustees to wind up its affairs; and, in that character, they filed the present bill. The bill stated that one Barnard, in October 1839, deposited with the bank, by way of security for an advance which the bank had made to Barnard, eleven Spanish bonds, payable to bearer; that Boucher, the managing director of the bank, in November 1839, placed the Spanish bonds in the hands of Pym, who undertook to procure an advance of 500 upon them in his own name, and to redeliver them to the bank, upon repayment of that advance and interest; that [224] Pym obtained 500 from Messrs. Vigne & Sons, on the security of the bonds, in his own name, and handed over to the bank the sum so obtained; that the bank paid Pym the interest from time to time, in order that he might pay the same to Vigne & Sons; and that Pym promised, if the said loan were recalled by Vigne & Sons, to repay it out of his own funds, or find another person to make the advance; that, after a short time had elapsed, Vigne & Sons required payment of the loan, and Pym led the managers of the bank to believe that he had repaid Vigne & Sons, and deposited the bonds with another party as a security for a similar advance. The bill stated that, in winding up the .affairs of the bank, the Plaintiffs found a balance due from Pym to the bank of 1257, 6s., consisting of advances made to him on consignments of goods to Australia, for which Pym had given bills on the consignees; that there was also a balance of 123, 8s. 6d. due from Pym on his general account with the bank; and that there was no entry in the general account relating to the business of the Spanish bonds, which was and had always been regarded as a separate transaction: that, in March 1841, Pym had signed a statement, acknowledging the accuracy of these balances, and the Plaintiffs at the same time advanced him a further sum of 560 on the security of the same eonsigments to Australia. The bill stated that, in October 1841, Pym gave the Plaintiffs notice that he had been applied to for repayment of the money advanced on the Spanish bonds, and inclosed a note purporting to be written by one Hall, threatening to sell the bonds if the sum were not immediately repaid; that application was made to Hall, who referred the Plaintiffs to Pym, and Pym ultimately refused to part with the bonds, and said that he would [225] not deliver them up until all transactions between him and the bank were closed. The bill stated that the Spanish bonds having greatly increased in value, Barnard made application for their redelivery, upon payment of the advance which he had received; and in May 1842 brought trover against the Plaintiffs to recover the bonds : and the Plaintiffs, having no defence, settled the action by paying Barnard 1002, 3s. 2d. for his debt in respect of the bonds and costs. The bill prayed that the Defendant might be ordered to deliver up the eleven Spanish bonds to the Plaintiffs; or if it should appear that they had been sold by, or by the direction of, the Defendant, that it might be declared the Defendant was bound to account for them at their highest value in the " money market" since such sale, or such other period as the Court should direct; and also for the damages 366 6OEDON .tV PM SHAKE,226. occasioned to the Plaintiffs by such sale of, or refusal to deliver up, the bonds. The bill also prayed an account of the dealings and. transactions between the Defendant and the bank, and that the Defendant might be ordered to pay the balance which should be found due. The Defendant, by his answer, said that Messrs. Vigne & Sons, having required repayment of the loan upon the bonds, the Defendant informed Boucher thereof, and Boucher said that the bank could not spare the money, and authorized the Defendant to sell the bonds; and that Vigne & Sons, on the 31st of October 1840, with the privity and concurrence of the Defendant, sold the bonds, at the market price, for the sum of 716, 11s, which, after deducting the loan, interest [226] and commission, left a balance of 199, 8s. 7d., which Vigne & Sons then paid to the Defendant. The Defendant said that he had been employed by the bank from time to time to discount, or procure to be discounted, bills of exchange in his own name, which he had done, receiving a commission thereon; that the transaction with regard to the Spanish bonds was of a like nature, and that he did not enter into a special agreement respecting them; that he did not know that;the bank had received or held the bonds only by way of security, until he was informed thereof by Barnard in the year 1841. The Defendant said that, at the time he received the balance of 199, 8s. 7d. from Vigue & Sons, the bank was indebted to him, and that they still .were indebted to him in respect of the consignments, the produced which they had received, and of his commission in the discounting business. He said that he was justified in the representations which he had made, and in refusing to disclose the real circumstances with respect to the Spanish bonds, by, the conduct of the bank and the Plaintiffs towards him. The conclusion of the Court on the effect of the evidence will appear from the judgment.. At the hearing, Mr. Russell and Mr. Anderson, for the Plaintiffs, argued that an immediate decree ought to be made against the Defendant for payment of the market price of the Spanish bonds at the time the Plaintiffs had applied.to him for their redelivery, or at the time that the Plaintiffs had been compelled to account .for them to Barnard; and that an account ought to be directed of the other transactions between the Defendant and the bank. Mr. Kenyon Parker and, Mr. Giffard, for the De-[227]-fendant, contended, first, that the Plaintiffs did not represent the.British and Australasian Bank so as to be enabled alone to institute a suit on behalf of the company; and, secondly, that the matter relating to the Spanish bonds was an item in the general account between the Defendant and the bank, and that neither from;the nature of the transaction, nor from the circumstances or consequences of the sale of the bonds, ought it to be the subject of any special direction in the decree for account which must be made. the vice-chancellor [Sir James Wigram]. The Plaintiffs- sue on behalf of themselves and the other partners in a dissolved partnership or company called the "British and Australasian Bank." They assume to themselves the right to represent the partnership or company. The bill seeks to charge the Defendant with the market value, at a given time, of certain Spanish bonds, and seeks also an account of the general dealings and transactions between the bank and the Defendant. Three questions have been raised in the cause. First, do the Plaintiffs properly represent the company in this suit? Secondly, is the Defendant to be charged in respect of the bonds, otherwise than with the amount actually produced by the sale of these bonds, being (as must be here assumed) the market value of the bonds at that time 1 And thirdly, having determined the amount of the Defendant's liabilities in respect of the bonds, is he to be charged therewith at once, as upon a separate transaction, without reference to the general account 1 or is the amount of the Defendant's liabilities in respect [228] of the bonds to be treated as an item in the general account prayed...
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