Subject_1 BILL OF EXCHANGE. Subject_2 DIVISION II.
The Porteur's Action against the Person upon whom the Bill is Drawn.
Subject_3 SECT. II.
Extraordinary Privileges of Bills.
Stuart and Gordon v. Alexander Campbell, Merchant in Edinburgh
Date: 31 January 1699 Case No. No 87.
Compensation upon the indorser's debt, not receivable against the onerous purchaser. This holds both in foreign and inland bills.
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A bill of exchange is drawn upon two partners, which is accepted. Afterwards, one of the partners dying, the other is charged, and suspends on this reason, that he to whom the bill was first indorsed and made payable, was debtor, by a ticket, to one of the partners in the equivalent sum, before he assigned it; and so he must have compensation.—Answered, 1mo, That could only reach his half of the bill who had the ground of compensation; but can never operate for his half who had no such ground. 2do, By the laws of France, and all other trading nations, compensation takes not place in bills of exchange; which must have summar course, and may not be clogged with such inconveniencies, else all commerce may be stopped; for a bill is repute as a bag of moneys, which goes from hand to hand, fictione brevis manus, and serves as a fund of credit for a considerable space of time, like bank notes.—Replied, Compensation is, by construction of law, repute equivalent to payment; and, by the concursus debiti et crediti, operates extinction ipso jure. 2do, Though foreign bills of exchange may claim this privilege, for celerity of trade, favoured jure gentium; yet inland bills, as this is, cannot be exeemed from the common law of compensation.—Duplied, By the very acceptance of the bill, you renounce any ground of compensation you had; for, however it was competent before, you have passed from it now. The case being new, and having inconveniencies on both hands; some moved to have it farther reasoned in their own presence; but the plurality being clear, they repelled the compensation.
Fol. Dic. v. 1. p. 98. Fountainhall, v. 2. p. 39.*** The same case is reported by Dalrymple:
There being an inland precept drawn upon George Clerk and Alexander Campbell, payable to Gordon, or his order, and accepted; Gordon indorsed the same to Stewart, who charges Campbell for payment.
Campbell suspends, and alleges compensation against Gordon, the indorser, in as far as he entered into a contract with George Clerk, one of the acceptors, for a quantity of coals to be furnished to him at a certain price, which must compense at least for George Clerk's half of the bill.
It was answered, No compensation is receivable against a bill accepted, payable to the presenter, or his order; for commerce doth require that such bills should pass from hand to hand, as an effectual and unquestionable security; and, if there had been any exception, the bill ought not to have been accepted.
It was replied, That compensation is equivalent to payment, and competent against all obligations whatsomever; and the bill might have been lawfully accepted in contemplation of that exception, which is no prejudice to commerce; seeing it is a defence authorised by law; and, whatever might be alleged in a foreign bill, yet the law of this nation ought to regulate inland precepts.
It was duplied, There is neither law nor reason to admit compensation upon the debt of an indorser, in case of an accepted bill; for such bills being drawn for ready payment, if they be not accepted without all quality and condition, it is free to take a protest, and recur upon the drawer, who will be liable to make them good; and, if the suspender had not accepted, Gordon would have recurred, and got his money; and the suspender having accepted the bill, payable to Gordon, or his order, it were against all reason to obtrude Gordon's debt to the charger, who relied upon the accepted bill. It is true, if the suspender had any ground of debt against the charger, compensation would be received; or if Gordon had pursued the suspender, as debtor to the drawer, in that case he might have compensed Gordon.
‘The Lords repelled the reason of compensation; and found, that a bill accepted, payable to the presenter, or his order, could not be compensed upon the debt of the indorser.’ See Compensation.
