Friday, 15 June 2012

Edinburgh United Breweries' litigation (part three)

EUB and Mr. Dunn just couldn't let their claim against Molleson go. After their initial claim was thrown out by Lord Kyllachy, they appealed. Not that the appeal achieved much, other than fill the pockets of their lawyers.

Molleson must have been well and truly sick of the affair. He hadn't been the owner of the Palace Brewery, just the trustee. He hadn't committed - or even been aware of - the fraud in books. Yet he kept getting dragged through the courts by EUB. I wonder if he had been paid for his work as trustee?

Here's a report of the appeal:

Judgment was given in the action by the Edinburgh United Breweries Company and Mr Henry Dunn, 27 Bishopsgate Street, London, against James Alexander Molleson, C.A., Edinburgh, trustee under a trust deed by David Nicolson, brewer, Parson's Green. Edinburgh, in which reduction was sought of the sale of the Palace Brewery, Edinburgh. The price paid was £28,500, and pursuers said it was effected by fraudulent misrepresentations that the profits of'the business for the two years previous had amounted to £3750 a year. Defenders said the books of the brewery were examined by accountants on behalf of the purchasers, and that the purchase was completed upon their report. In the Outer House Lord Kyllachy said it had transpired that the books of the brewery had been falsified by a clerk. This was done to deceive Mr Molleson, and his Lordship held that both parties agreed to accept the books as showing the true amount of the profits. He therefore held the pursuers were not entitled to reopen the contract, and be gave absolvitor, with expenses. The pursuers reclaimed to the First Division, who gave judgment today.

Lord McLAREN delivered the opinion of the Court. He said that to his mind the placing of falsified books before the purchaser was equal to placing no books before them at all. He came to the conclusion that Mr Dunn could not be barred by the agreement between him and Mr. Molleson from challenging the sale, because he only agreed to take the brewery on the condition that the books should contain a true record of the business. But while he held that to be established, it did not quite follow that the pursuers were in a position to enforce a claim for restitution, which was what was asked in this action. There were two contracts, one between Mr Molleson and Mr Dunn, and the other between Mr Dunn and the United Breweries. The United Breweries were not parties to the contract with Mr Molleson, and the really important question was whether Mr Dunn had a right to reduce the contract. The special feature of the case was that Mr Dunn had re-sold the brewery at a profit of £8000. He understood that Mr Dunn intended to keep that £8000 which he made by means of the representation of forged books, and at the same time to cut down the sale on the ground that it was restricted by those very books. The truth was that Mr Dunn was not an injured person. His Lordship thought they would do no injustice if they maintained unimpaired the principle that no person could maintain the principle of equity who was not prepared to do equity, and that, in particular, the right of relief against fraud was denied to him who was seeking to obtain benefit secured by fraud. As, in his opinion, Dunn was not in a position to claim restitution, it followed that the action at the instance of the United Breweries must also fail. The other judges concurred, and Lord Kyllachy's judgment was affirmed, with expenses."
Glasgow Herald - Saturday 18 March 1893, page 3.
Mr. Dunn had a cheek. He was happy to keep the profit he got from selling the brewery, benefit of the cooked books, but wanted to get the price he had paid reduced. As EUB and Dunn brought the case jointly, one can only assume that some of the reduction of the price he paid would have been passed on to EUB.

I can see how EUB and Dunn got sucked into this case. They must have been pretty pissed off when they found out the Palace Brewery books had been lying. Angry enough to bring in the lawyers. But they don't seem to have thought things through. Did their lawyers think they had a chance of winning? Perhaps not. Probably not. Maybe Dunn and EUB just ignored their sage advice and told them to get on with it. We'll never know.

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