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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> William Morton & Co v Muir Bros [1907] ScotCS CSIH_1 (13 July 1907)
URL: http://www.bailii.org/scot/cases/ScotCS/1907/1907_SC_1211.html
Cite as: [1907] ScotCS CSIH_1, (1907) 44 SLR 885, (1907) 15 SLT 252, 44 SLR 885, 1907 SC 1211

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JISCBAILII_CASE_SCOT_INTELLECTUAL PROPERTY

13 July 1907

William Morton & Co.
v.
Muir Brothers & Co.

Lord M'Laren.—The question in this case relates to the legal construction of a form of contract which appears to be in general use in a branch of the weaving industry, videlicet, the manufacture of lace curtains as carried on in Irvine and the neighbourhood. According to the evidence it is a case of very frequent occurrence that a manufacturer who is unable to overtake all the work that he has in hand commissions another manufacturer to weave a stated number of curtains according to a design which he supplies. The lace design is wrought out by means of the well-known apparatus of the Jacquard loom; and I need hardly add in speaking of such a very familiar process that to the production of any given design, it is necessary to prepare a system of perforated cards by means of which the threads of the warp are shifted in the process of weaving so as to produce the required design.

When an order is given, the manufacturer who accepts the order has to prepare a system of cards corresponding to the design supplied to him. The preparation of the cards is a very material element in the cost of production. The weight of the evidence is to the effect that the maker in estimating for the cost of the number of curtains ordered includes the whole cost of preparing the cards, although some witnesses say that such estimates do not always cover the entire cost of preparing the cards, and that to a certain extent the manufacturer trusts to the chance of getting what is termed a “repeat order” to indemnify him completely for his outlay. It would thus appear that in general it is for the interest of both parties that such repeat orders should be given. The manufacturer who gives the original order (and who in this transaction may be regarded as a merchant employing the other manufacturer) will naturally wish to sell as many copies as possible of his design, and the maker of the curtains will wish to supply as many as possible, because then his original outlay in making the cards is spread over a larger quantity of goods.

The practice seems to be (I am not now considering its legal effect) that at least for the season in which the order is given the cards are held at the disposal of the person who gives the order, and are only used for orders given by him. But as the cards are the maker's property it is considered that when the person giving the order has no further use for them, e.g., if he intimates that he is not going to give a repeat order, the maker of the cards may use them for the purposes of his own business, or it may be for the execution of orders received from other parties. This practice is said to flow from, or at least to establish an implied condition of the contract for the supply of the goods.

In this connection one other feature of the trade may be noticed. I have hitherto spoken of the case where a manufacturer, being unable to overtake all the work he desires to execute, employs another maker in his own branch of the trade to weave for him. But it is explained that in Nottingham, which is or was the chief seat of the lace industry, there are makers who do not manufacture lace goods on their own account, but make their living by doing work for other manufacturers. This is called by the witnesses the “brown trade,” because the goods are in the brown or unbleached condition while they are in the hands of these auxiliary makers. I only mention this circumstance because it entered into the arguments. But, as I understand, there has only been one maker of the “brown trade” in Irvine, and in my opinion the distinction is of no consequence for the purposes of the present action. The respondents, William Morton & Company, employed Robert Muir, now insolvent, to make lace curtains for them according to designs which they supplied. The work was executed on the usual terms; that is to say, the price charged to Messrs Morton was understood to cover the preparation of the cards, and the cards were the property of Robert Muir, and passed to the trustee on his sequestrated estate.

The trustee sold the machinery and plant by auction; and in the articles of roup a special condition was inserted regarding the cards which were disposed of, which I shall afterwards consider, because it is a disputed point whether that condition applies to the cards made by Robert Muir to the order of Morton & Company. To complete the narrative of the facts of the case, I have only further to say that Messrs Morton, respondents in the appeal, who wished to make further use of the cards which had been made by Robert Muir in pursuance of their orders, found that Messrs Muir Brothers were using these cards for their own purposes in contravention of the preferential right which they assert, and they instituted this process of interdict in the Sheriff Court to have the appellants interdicted from using the cards made from their designs for the manufacture of lace curtains, and from selling the lace curtains which they had made from the said cards.

In these circumstances the following are the questions which, as I think, arise for decision:—

(1) Is the condition alleged by the respondents within the region of usage of trade, or customary implied condition, and is this customary condition proved?

(2) Assuming that a trustee in bankruptcy takes no higher right than that of a gratuitous alienee (which I take to be the meaning of the expression tantum et tale), was the trustee in this case affected by the condition that the cards made to Messrs Morton's order were not to be used without their consent?

(3) Are the appellants, who are purchasers from the trustee, affected by the condition?

On the first question, I may begin by stating what I conceive to be the fair result of the evidence, videlicet, that according to the general understanding of the trade in Scotland, a maker who works to a design supplied to him has not an unqualified right to the use of the cards which he makes from that design, but is held to have received the design for the purposes of the order given to him and any further orders from the same manufacturer or merchant. The witnesses naturally vary to some extent in their way of expressing the condition which limits the use that may be made of the cards, but the substance of their evidence is that the maker of cards to a design which is not his own is subject to a twofold condition (1) that the cards are to be kept unused for a reasonable time to admit of the merchant or purchaser of the goods giving repeat orders if he so desires; (2) that the cards are not to be used by the maker for his own purposes unless and until the merchant or purchaser has no further use for them. I do not propose further to analyse the evidence on this subject, because I hold that its import is reasonably clear, and because, as I understand, this appeal has been taken mainly in the view of getting a decision on the legal questions arising out of the case. I proceed therefore to consider what are the limitations on the right of ownership in the cards which may reasonably be implied from the nature of such contracts and the usage which has prevailed in carrying them into execution.

The conception of an implied condition is one with which we are familiar in relation to contracts of every description, and if we seek to trace any such implied conditions to their source, it will be found that in almost every instance they are founded either on universal custom or in the nature of the contract itself. If the condition is such that every reasonable man on the one part would desire for his own protection to stipulate for the condition, and that no reasonable man on the other part would refuse to accede to it, then it is not unnatural that the condition should be taken for granted in all contracts of the class without the necessity of giving it formal expression. A very good illustration of such an implied condition is the case of photographic portraiture referred to in the argument, and which was the subject of decision in the case of M'Cosh v. Grow & Company . It was there held that while the property of the negative portrait is in the photographer, he is not entitled to make copies from it for sale or exhibition without the consent of the person giving the order. This is a decision of our own Court, and from the authorities there cited, and particularly the opinion of Mr Justice North, which is quoted by Lord Moncreiff, I have no doubt that the law of England is to the same effect as our own. Indeed the laws could not well be different. The decision is an adaptation to the comparatively new process of photography of the established principle that an artist who paints a portrait to order is not entitled to multiply copies of it without the purchaser's consent. But the interest of the decision as bearing on the present case depends on the peculiarity that photographic prints are obtained by means of an intermediate production, the negative plate through the instrumentality of which the positive prints are produced, just as, in this process of weaving, the lace curtains are produced by the action of the perforated cards on the warp in the loom. The cases have also this element in common, that they relate to the multiplication of an artistic design by mechanical methods.

I should desire, however, to guard myself against too readily accepting the suggested analogy and applying it to a special industry like the weaving trade; and without proposing to rest the decision on what is technically known as usage of trade, I think that evidence of the general understanding of the trade may very usefully be considered in determining whether there is or is not an implied condition in such contracts whereby the merchant who furnishes the design reserves to himself a certain control as to the use to be made of the cards which are prepared from his design.

If I had to consider the question without the aid which this evidence affords, I should think it a very unreasonable result of the bargain that the manufacturer, as soon as he had furnished the number of lace curtains that were ordered, should be at liberty to make use of the design and the cards prepared from the design to make an equal number of pieces for himself and so to compete in the market with his employer. I should not consider that the non-registration of the design made any difference, because the employer might be prepared to take the risk of members of the public copying his design and making sets of cards for themselves, and might yet consider himself protected by the nature of his contract against such a breach of confidence as is implied in the act of competing with him by the sale of goods made directly from his design and from the cards for which he had paid. If the employer had intimated that he had no further use for the cards, and especially if a sufficient time had elapsed to enable him to dispose of the goods supplied to his order, I should not be prepared to hold that the owner of the cards was put under any further implication not to make use of them. But, now, when I learn from the evidence that what I should suppose to be a reasonable implication from the nature of the contract is in exact accordance with the understanding of the trade, uniformly accepted and acted on, although not hitherto brought to the test of a legal decision, I think the implication is very much strengthened. The two grounds of judgment are not distinct; they support each other. First, the condition must be one which the law will regard as reasonably arising from the nature of the contract when fully understood. But, secondly, as the Court is not conversant with the details of commercial business, we receive evidence on this subject, and the result of the evidence on my mind is that I am satisfied that such a condition is implied; in other words, that no merchant would furnish a design and give an order except on the understanding that the maker of the goods was not to make use of his design to compete with him in the market.

On the second question which I have put I shall say very little, because I think it is perfectly clear that the trustee in bankruptcy is bound by any personal condition which limits the right of the bankrupt. The argument that was rejected by the House of Lords in the case of the Heritable Reversionary Company v. Millar was that the trustee was only bound by conditions which entered into the real right. The bankrupt was the manager of a loan company, for whose convenience the titles to their securities were taken in the manager's name. The trustee on the bankrupt's estate proposed to sell these securities for the benefit of creditors, but the decision was that as the bankrupt held the properties in trust, although the trust was not reduced to writing, the creditors took nothing but the legal estate. In the present case if we are right in holding that Robert Muir could not conscientiously use these cards for his own purposes, standing Messrs Morton's right in them, it follows that the trustee was under a similar disability.

There remains for consideration the third question, whether the appellants, who are purchasers from the trustee in bankruptcy, are affected by the implied condition? Now, I think it is quite possible that a trustee on a sequestrated estate, like any other owner of restricted property, might be able to give an unrestricted title to a bona fide onerous purchaser without notice of the restriction. This, however, could hardly ever occur in the ordinary course of business. Because, first, unless we suppose fraud or incredible ignorance on the part of the trustee, he would certainly give the purchaser notice of the restriction affecting the subject of sale; and, secondly, even if there was no express notification, in the case of a sale of moveables the purchaser would most probably discover the restriction for himself.

In the present case, the articles of roup contained a special stipulation as to the cards. I should here state that one of the firms (Messrs Heyman) that had given orders to Robert Muir had put him under an obligation in writing not to use the cards made from their designs to their prejudice. Now, with reference to the sale of the stock of cards pertaining to the sequestrated estate the articles of roup contain this clause:—“The purchaser shall only be entitled to use the same subject to his implementing the obligations undertaken by, or incumbent on the second party to said agreement (Heyman's agreement), or under any other similar agreement in connection with said cards or any of them.”

I think that the effect of this clause was that the trustee did not profess to give an unqualified right to the use of any of the cards sold, and that the purchasers are put on their inquiry as to the existence of any similar agreement affecting cards other than those which belonged to Messrs Heyman. That the purchasers so understood the clause I do not doubt, because the price paid was only £1 per ton, which according to the evidence is the value of the cards as waste paper. The appellants in a sense were bona fide onerous purchasers, but then the price which they paid is not consistent with the supposition that they bought the cards with a right to use them for the manufacture of curtains for themselves. I do not, however, attach much weight to this consideration, because we know that bankrupt stock is often purchased for a sum much below its intrinsic value, and this was a sale by auction. But on the question whether the purchasers had notice of the condition affecting the use of the cards, I think that the expression “or under any other similar agreement” was sufficient notice that other persons in a similar position to Messrs Heyman had claims of a like nature on the cards made to their designs; and as the appellants purchased the stock and plant, including the cards, with the intention of continuing the business carried on by Robert Muir, or engaging in a new business of the like nature, they must be held to have had knowledge of the customary conditions under which the designer has a preferential right to the use of the cards. For these reasons I am unable to affirm that the appellants acquired the cards free from the conditions affecting their use.

According to the uncontradicted evidence of Mr Morton, he in April 1905 asked the appellants for a quotation for the making of curtain nets applicable to certain of his designs. The price quoted was 20 per cent higher than he had previously paid, and he did not see his way to giving a repeat order. He afterwards learned that the appellants had offered the same goods to another trader at a lower price. I think that this action of the appellants was inconsistent with the respondents' rights as designers of the pattern, and that interdict must follow. In granting interdict in this case, we do not in any way disaffirm the claim of the makers of such cards to make use of them in the case where the designer or owner of the design has intimated that he has no further use for them, or in the case where a reasonable time has elapsed (which the witnesses put as a year) without a repetition of the original order having been given.

I have only further to say that I do not think that the case of the respondents requires that they should have a jus quœsitum under the articles of roup. If these articles had proposed to give a new right or to create a new restriction as to the use of the cards, the question would arise whether the respondents, who are not named in the articles, could claim the benefit of the right. But the object of the articles is the conservation of existing rights, and the motive of the trustee who put forward the articles was to protect himself against claims which might have arisen against himself if he had proposed to give a higher right than he himself possessed. In such a case, the party who founds on the implied condition does not found on any right arising out of the articles of roup. He only refers to the articles for the purpose of shewing that the purchaser had notice of a claim inconsistent with the full right of property which he asserts. For this purpose the respondents may refer to the articles of roup without founding on the instrument as a source of title or right.

In all the circumstances, I am of opinion that the decree of the Sheriff should be affirmed.

Lord Pearson.—(After narrating the facts)—The question now arises as to the right of the second manufacturer to use the cards thus obtained in making curtains of the same pattern for himself or for a third manufacturer, so as to compete with the firm from whom he got the design for the special purpose I have described. It is obvious that by using the patterns for his own behoof, or for behoof of a third party, he might easily compete with and undersell the manufacturer who entrusted the design to him.

Although the pursuers aver on record that the cards are their property, that is not the form of their claim, nor is it any part of their case. On the contrary, the conclusions of the summons are framed on the footing that the cards themselves are the property of the defenders. Accordingly the pursuers do not ask for delivery of the cards. The decree which they seek is an interdict against the defenders using the cards in question for their own behoof in the manufacture of lace curtains and curtain nets, and also against their selling curtains and curtain nets made from the said cards.

Accordingly it is incumbent on the pursuers to establish that the defenders' admitted right of property in the material of the cards themselves does not carry with it an absolute right of user, but is subject to some qualification or restriction in the pursuers' favour.

The case is further complicated by the fact that the defenders, Muir Brothers & Company, were not originally parties to the contract. That was entered into between the pursuers on the one hand and a firm designed as Robert Muir, lace manufacturer, on the other. The estates of that firm were sequestrated in the year 1904, and the trustee in the sequestration (Mr Alexander Mitchell, C.A., Glasgow) proceeded to sell the business and the factory, and also the stock of cards which were in the hands of the sequestrated firm, including the cards now in question.

There are therefore two distinct questions raised. The first is, did the firm of Robert Muir, with whom the pursuers entered into the original contract, hold the cards under any qualification or restriction enforceable by the pursuers, as to the use they could make of them; and, in particular, were they at liberty to use them for the production of curtains which might be put on the market so as to compete with the pursuers? The second question is, whether in the circumstances under which the defenders Muir Brothers & Company acquired the business and the cards, they are affected by any such restrictions or qualifications as to the use of the cards which might have been enforceable as between the original parties?

One argument which was urged for the defenders I may notice at this stage. It was pointed out by the defenders that the patterns being unregistered designs had no protection, and became public property when once they were put on the market; and it was argued that the pursuers are here attempting to get the benefits of registration by means of private agreements. I must say that this does not strike me as an accurate or fair representation of the pursuers' position. I think they are entitled by private agreement to limit the area of publicity as much as they can, and so to arrange matters by contract that their own patterns shall not be used against them in the trade through any act of the firm to which they have entrusted them for a specific purpose. That position seems to be quite reasonable, and all the more so because the arrangement is really for the advantage of both parties. It was represented as an arrangement by which the defenders were said to have bound themselves not to take advantage of these patterns as public property, which all the rest of the world were entitled to do. But it is to be remembered that the arrangement is for mutual advantage. It is entered into when one manufacturer has his mill running full and another has not. The former sends his own new and private patterns, prepared (as the proof shews) at considerable cost, and with them he sends an order for so many hundred or thousand pairs of curtains. The other is perfectly free to decline the business; but if he does not, he makes an offer to manufacture the goods at so much per pair, allowing for the cost of preparing the pattern cards. It is obvious that if, in addition to the agreed quantity, he were to manufacture from the same cards for his own private business, or for a third party, he might do a great deal of harm to the firm which owned the patterns. He himself, having no outlay on patterns, could undersell the firm in that pattern of goods in the general market, or he might put other firms in a position to compete with them. So far therefore from there being anything undue or unfair in the pursuers' contention, it seems to me to be quite fair and natural that it should be part of the contract, that so long as the manufacturer who so employs the other has it in contemplation to continue his orders, that other shall not be entitled to make any other use of those cards, but that he is free so to use them if the other party either notifies that he is done with his orders or has allowed a whole season to elapse without renewing them.

The pursuers put their case alternatively, maintaining that a contract of such a nature would of itself imply some such limitation, but that in any view there is a custom of trade to that effect. I am disposed to think that the first alternative would suffice for the pursuers' case, and that the contract between the parties really constitutes one of those confidential business relationships in which one party is entrusted with something which he is to use for a specific purpose and no other—as where private patterns are handed to an ironfounder or confidential papers to a typewriter. But it is not necessary, in my view, to decide the case on this ground, for the pursuers have averred, and, in my opinion, quite satisfactorily proved, the existence of a custom of trade to the same effect. On this point I consider it sufficient to refer to the careful and accurate analysis of the evidence by the Sheriff-substitute. I hold that the terms which the pursuers seek to import into this contract by usage of trade are (to use the words of Sir Frederick Pollock) “proved to be an accustomed part of such contracts, made between such persons as the Court has before it.”

The second question in the case, as to whether the defenders, who come in as purchasers from the trustee, are bound by the contract to this effect, is, I think, a question of some difficulty. I do not refer to the question whether the trustee in the sequestration is so bound, for I think it clear that he is. But the contract must be transmitted against the purchasers. Now, I think it is proved (1) that the purchasers took up and completed all the pursuers' orders which were actually in hand at the transfer; (2) that as regards current orders not actually in hand, they accepted from the pursuers a cancellation of so much of them as applied to nets, but not of the others; and (3) that in response to their suggestion that they should destroy the pursuers' cards in stock, they were requested by the pursuers not to do so, which was tantamount to leaving those cards open for further orders. The defenders, however, instead of waiting till the end of the season, set about immediately to manufacture curtains from those cards and to put them on the market in competition with the pursuers. This, I hold, they were not entitled to do, inasmuch as upon the proved facts they had adopted the original contracts, with all their terms, express and implied.

Lord Ardwall.—(After narrating the facts)—In these circumstances the present action of interdict was raised.

It will be convenient to consider the pursuers' case under two distinct heads, and to inquire, first, whether the firm of Robert Muir got possession of these designs and held the cards made from them under a contract which prevented them from using them otherwise than for executing the pursuers' orders or repeat orders; and, second, assuming that this was so, whether the defenders as purchasers of these cards are barred by delegation, adoption, or otherwise, from repudiating the conditions of the contract under which Robert Muir held these cards.

The contract under which the designs in question were handed over to Robert Muir was one of a simple description. The designs were sent along with an order for curtains or nets which took the form of a letter setting forth the numbers of the designs sent, the number of pairs of curtains or lengths of net wanted, the quality, and the price at which they were to be manufactured. It is proved that in accepting orders or estimating for the manufacture of curtains the manufacturer who is to weave them is accustomed to take into consideration the cost of making the cards necessary to carry out the designs. It is maintained for the pursuers that in all such contracts there is an implied term arising from the custom of the trade to the effect that the manufacturer to whom designs are sent by another manufacturer in order that the first manufacturer may weave curtains and curtain nets therefrom for behoof of the second manufacturer is not entitled to utilise cards punched for the purpose of carrying out the designs of the manufacturer who gave him the order except for orders or repeat orders of such manufacturer, or, to put it more shortly, that a manufacturer employed to carry out a design furnished to him by another manufacturer for the purpose of executing orders for him, is not entitled to utilise these designs or the cards made from them for his own purposes. This custom, of course, may be expressed in a variety of ways applicable either to the use of the designs or the cards or the curtains and nets manufactured from them, but the above statement of it sufficiently sets forth the custom as averred by the pursuers.

In considering whether the alleged custom of trade has been proved to exist, I think it is of importance to observe that, apart from such custom altogether, and assuming nothing to have been said or done beyond the handing over of the design and the giving of the order, it seems to be a condition necessarily implied in a contract of a confidential nature such as that in question that a manufacturer to whom a design is entrusted by another manufacturer for a particular purpose should not make use of that design for any other purpose than that for which it was given to him, and in particular should not, having been entrusted with the design for a particular purpose, endeavour to turn it to his own benefit contrary to the trust under which he received it. A number of analogous cases may be given, e.g., when a person hands a manuscript intended only to be printed for his own use or for private circulation to a printer, such printer would not be entitled to print and then publish copies taken from that manuscript; and again, suppose an inventor of some new machinery or the like sends a rough model of his invention to someone more skilled than himself in the same trade and employs him to make drawings from it with a view to taking out a patent, it would necessarily be implied that the person so trusted with such model should not employ it for the purpose of taking out a patent himself or selling the invention to some other person. All this, I think, holds good in regard to most confidential contracts, even where no patent has been taken out or no trade-mark or design has been registered, or no printed matter has been entered at the Stationers' Hall. It is, I think, entirely beside the point to say that the present interdict is an attempt to get the benefit provided by the Designs Act without applying for registration, and it is out of the question, in my opinion, to say that such a custom of trade as that alleged or such a condition of contract is to any extent illegal or contrary to public policy.

Now, if a limitation of the rights of a maker of cards from a design is so natural and reasonable as almost to amount to an implied condition of contracts such as those in question, it does not require a great deal of evidence to prove that such a limitation has become crystallised into a recognised custom of the trade.

The Sheriff-substitute has set forth in his note an excellent analysis and criticism of the evidence, and I do not think it is necessary for me to go into it further than he has done. I agree generally with the view that he has taken with regard to the district in question, which it now seems is the centre of the lace curtain trade, to the effect that the custom is undoubtedly proved to exist there, while with regard to Nottingham and other places it seems certain that whatever the witnesses may say as to the particular wording of the condition which custom is understood to imply in contracts of this kind, they all practically admit that when one manufacturer hands a design to another to carry out, that other manufacturer gets possession of the design and makes cards from it subject to certain conditions more or less stringent in favour of the person from whom he received the design. But I may observe that the greater part of the evidence from Nottingham is inapplicable to the present case, for the cases which are spoken to by the witnesses from that district are for the most part cases arising between manufacturers and merchants, where the circumstances are very different from the present case, inasmuch as a merchant who has either made or bought a design is only concerned to have a certain number of curtains made from it, generally only for a season; he keeps no stock of cards and no warehouse to put them in, and when once he has got as many curtains to dispose of as he requires for the season, the cards are of no further value to him, and indeed would be probably an incumbrance, and therefore, as might be expected, the rules regarding merchants are not nearly so stringent as those regarding manufacturers.

Taking the evidence as a whole, I am of opinion, without any serious doubt or difficulty, that the pursuers have established that there is a custom of trade in virtue of which there is an implied condition such as they contend for in all contracts where designs are handed by one lace manufacturer to another for the purpose of executing his orders, that condition being that the manufacturer to whom the designs are entrusted is not entitled to use them or the cards made for the purpose of carrying them out except for the purpose of executing the orders of the manufacturer from whom the design was received. It follows that I hold that the firm of Robert Muir received the designs and held the cards made therefrom subject to the said implied condition.

It is almost unnecessary to observe that the evidence shews that if the manufacturers to whom the designs belong either expressly or impliedly notify the holder of the cards that they do not intend to manufacture from these designs any more, the holders of the cards are entitled to use them as they please. Such notification is frequently held to be implied from long abstention from giving orders for curtains of a particular design.

The second and perhaps more difficult question in the case is whether the defenders are affected with the condition under which the firm of Robert Muir held the cards. In answering this question some attention requires to be paid to the circumstances under which the defenders took over these cards. Robert Muir's trustee in bankruptcy, Mr Mitchell, had for some time before the sale to the defenders been carrying on the factory belonging to the sequestrated estate, and it is noticeable that he had, as a trustee has a right to do, adopted the current contracts which the pursuers had with Robert Muir, because up to the time of the factory being handed over to the defenders he was manufacturing goods from the pursuers' designs in fulfilment of orders given by them. This appears from the evidence of Mr Bryson, a partner of the defenders' firm, and it also appears from the same evidence that the defenders took over these contracts from the trustee. Mr Bryson says:—“When we had fixed the price of the cards with Mr Mitchell we made an arrangement with him with regard to the orders in the books. We agreed to execute them without making any claim against the trustee. … Among these orders were certain orders for the pursuers. ” He then goes on to say that they received a general cancellation of all work for the pursuers, and then they wrote the letter of 22d March 1905, which is in these terms:—“We accept with pleasure your cancellation of goods and orders excepting those made and on machine. We have a number of your patterns here, and, assuming they are worthless, we purpose destroying them”; following on which the pursuers instructed the defenders not to destroy them in the meantime. I think this must be taken to mean that they might require to give them further orders, and the result was that Mr Robert Muir junior, who was then in the employment of the defenders, answered verbally on their behalf that it was all right, and that they would not be destroyed.

The importance of all this is that it appears that first the trustee and then the defenders adopted the current contracts between the pursuers and the firm of Robert Muir, and I think it is not unfair to the defenders to hold that they undertook to retain the cards in question under the same conditions as the firm of Robert Muir had held them. As throwing light upon this it is noticeable that the price at which the cards were sold was fixed at £1 per ton, which is the price at which waste cards and waste paper are usually sold. So far from their observing the conditions under which these cards were held by Robert Muir the defenders proceeded to compete with the pursuers in the market, for about the beginning of April 1905 Mr Morton, of the pursuers' firm, asked them for a quotation for the making of curtain nets according to certain of the designs. The price quoted was 20 per cent higher than the pursuers had previously paid, and they accordingly did not give a repeat order. In the following month a customer came asking for a quotation for one of the designs mentioned in the prayer of the note, and when Mr Morton quoted the price, he was told that the customer could buy the same number from the defenders at 4d. per pair less. The pursuers at once found fault with what was being done, and after certain correspondence, and receiving no satisfaction from the defenders or any undertaking from them that they would cease to compete with them in curtains made from their own designs, they gave instructions for the raising of the present action of interdict.

In the whole circumstances I am of opinion that first the trustee in bankruptcy of Robert Muir and then the defenders' firm adopted the current contracts between the pursuers and the firm of Robert Muir, and must therefore be held to be bound by the same conditions as those under which the firm of Robert Muir had received the designs and held the cards. I consider there is considerable force in the view taken by the Sheriff-substitute, that under the articles of roup there was a jus quœsitum in favour of the pursuers, but I prefer to put my decision upon the ground that the defenders adopted the contract between the pursuers and Robert Muir, and after recognising that the pursuers had rights in the designs and cards made therefrom, proceeded, in breach of the conditions of the contract, to compete with the pursuers by offering for sale curtains made from their designs at a lower price than they were quoting to the pursuers for the same curtains made from their own designs.

For these reasons I think the Sheriff-substitute's decision ought to be affirmed.

[1907] SC 1211

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