ALEXANDER V. FULTON.

New Zealand Mail, Issue 1190, 21 December 1894, Page 4

ALEXANDER V. FULTON.

AN IMPORTANT COMMERCIAL

CASE.

THE NEW ZEALANDER WINS.

From Our Own Correspondent.

London, November 3.

On Thursday last the Lord Chief Justice, assisted by a special jury, was called upon to decide whether Mr Fulton * a sheep farmer in New Zealand, should be cast in damages for alleged malicious prosecution of Mr James Alexander, formerly a partner in the well-known colonial house of Redfern, Alexander and Company. The plaintiff’s case, as set forth by Mr Pyke, Q C., was as follows: —Mr Alexander was in the year 1892 sole surviving partner in the firm, with i which defendant had business relations for a space of eight years and the plaintiff held his power of attorney. The defendant was in the habit of sending consignments of wpol to England and of drawing upon plaintiff, the staple being sold through Messrs Redfern’s brokers. In 1892 two consignments were sent per Hurunui and Peru respectively, the bills of lading being sent to the plaintiff, who pledged the documents with a firm of woolbrokers for LI 800 and L7OO respectively, and the defendant drew lipon plaintiff LI7OOO and L6OO. The first consignment realised LIB3O after deducting charges, and this was

the state of affairs in August 1892, the second consignment not then having been sold. In that month the representatives of a former partner sued Mr James Alexander for a sum of L 52,000, which had been left in the firm, and they obtained judgment under Order XIV. The plaintiff was obliged to file his petition in bankruptcy. Defendant was informed of what had taken place and at once withdrew his power of attorney and ordered the second consignment of wool to be handed over to other agents. This, of course, could not be done, the brokers who advanced L7OO on it having put a claim upon the wool. In 1893 tlie defendant came Home and sought to obtain payment of his debt by threatening prosecution. Failing to obtain the, money he laid an information at the Guildhall, and a summons was issued charging plaintiff with an offence under section 78 of the Larceny Act. The charge was, however, dismissed by the alderman, who made some very strong observations about the case.

Plaintiff’s discharge was afterwards suspended for five years on account of his speculations,. the debts being L 208,000 and the assets L 43,000. Mr James Alexander being called gave a detailed account of his business transactions with Mr Fulton and stated that there was nothing unusual in pledging bills of lading and getting advances on consignments of wool. Cross-examined by Sir Edward Clarke, Q;C., the plaintiff admitted that he never informed defendant of the course of business ; that would be a most unusual thing to do. Mr Alexander briefly sketched out the features of the firm’s failure, attributing the final collapse to the Baring crisis in 1890. The defendant had a credit of L 250 when the first consignment came to hand. After he had filed his petition plaintiff wrote to Mr Fulton so:— “ This should be a lesson to you not to draw clean bill3 and send documents free; It is a dangerous custom.” In re-examination plaintiff said he looked upon the bills of lading as his own property, as his firm had a running account with defendant. The Lord Chief Justice did not think that such a practice could generally exist, but the defendant admitted at the Guildhall that there might be a custom as to pledging bills of lading. The depositions before the alderman were then read and the evidence of Mr Levein, who spoke as to negotiations having taken place with- a view to avoid a prosecution. For the defence Mr Wontner, a solicitor, said that Mr Fulton consulted him before the information was sworn and also showed him the advice received from an Australian firm of solicitors. He was not aware that the plaintiff held defendant’s power of attorney, nor that there was “ a custom” as to pledging bills of lading. In his opinion mala fides was necessary to constitute an offence under section 78 of the Larceny Act (24 and 25 Vic. c. 96). He ought to have been told about the power of attorney. The defendant was now in New Zealand.

Sir Edward Clarke, Q.C., in his address to the jury said that if defendant had reasonable and probable cause for action, as he did, his motives were immaterial. On the question of damages plaintiff could not ask for damages for the loss of commercial reputation, for that was gone long before the prosecution was instituted, and the fact of his discharge being suspended for five years proclaimed him a “commercial leper.” Every statement in the information had been admitted to be true and he did not see how the defendant could think otherwise than that plaintiff had acted in violation of good faith in the matter. The question of plaintiff’s strict legal rights under the power of attorney was immaterial, if defendant had an honest belief on the subject. No one could know better than the plaintiff the position of his firm at the time of the pledging of defendant’s bills of lading and getting advances thereon. The plaintiff had not, in the witness-box, claimed to have acted under the power of attorney and therefore that document could not affect the case.

Mr Pyke, in reply,regretted the line that had been adopted by Sir Edward, and said that the plaintiff was fully entitled to believe that he was acting within his rights as an honourable man. He asked the jury to give substantial damages. The Lord Chief 'Justice in summing up drew the attention of the jury to the distinction between actions for u false imprisonment” and those for “ malicious prosecution.” In the former case the onus was on defendant

of showing that he had tf reasonable and probable cause,” in the latter it lay with the plaintiff to show that the defendant had not “ reasonable and probable cause.” Regarding the case in hand the first question the jury had to consider was whether defendant had “ maliciously ” prosecuted plaintiff. Malice meant any indirect motive such as “ spite,” or a desire to put the “screw ” on. With regard to the question of “ reasonable and probable cause,” he regretted that it was for him to decide, not the jury, but he would ask them certain questions, and on their answers he should give his ruling. Those questions were : What is the inference which a reasonable man of business ought to draw, in all the circumstances of the case as known to defendant, as to the power of plaintiff to pledge the wool in question ? Would such inference be that the plaintiff might, without violation of good faith, pledge the wool; or would such inference be that the plaintiff, could not, without violation of good faith, pledge it? Did the plaintiff honestly believe that the criminal offence with which he charged the defendant had in fact been committed ?

On the question of damages he took a very strong view, that although plaintiff’s commercial reputation was gone, yet if the jury considered that “ defendant had maliciously prosecuted plaintiff,” the latter was entitled to such damages as would clear him from that charge. The jury retired, and twenty minutes later found that defendant was justified in believing that a criminal offence had been committed, and that the fair inference was that plaintiff was not entitled to pledge the wool. The Lord Chief Justice found that the defendant had “ reasonable and probable cause,” and gave judgment for Mr Fulton.