Stipulations in favour of third parties. - Order to pay money to third parties. - Effect to the third party, of voidance of the right by which he had been favoured.
John Gray v. Lord Ross
Date: 16 January 1706 Case No. No 7.
The creditor in a bill, having given orders to his trustee, to whom it was indorsed, to pay a part of the money to a third party, his creditors, the Lords, notwithstanding the order, found the property of the money remained with him who sent the advice, and therefore might be arrested by his creditors.
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Sutherland of Kinauld draws a bill upon Mr John Middleton, payable to Gordon; Middleton accepts, and Gordon delivers the bill to Kinauld indorsed to a blank person, in which David Ross his name is filled up.
Middleton being charged in the name of David Ross, he suspends on multiplepoinding, and also upon partial payments made to Kinauld, for whose behoof he alleged the bill was indorsed to David Ross.
David Ross being ordained to be examined, depones, that the bill was sent to him blank by Kinauld, and he ordered to fill up his own name, for security of a small sum due by Kinauld to himself, and the remainder was to be applied for relief of cautionries wherein Mr Charles Ross stood engaged for Kinauld, and thereafter he told him that the remainder was to be applied for payment of a debt due by Kinauld to my Lord Ross; and that the deponent replied, he could not comply with that desire without the allowance of Mr Charles Ross, to whom Kinauld had formerly ordered the superplus to be applied, at least for his relief; and that Mr Charles afterwards consented to the application of the money to my Lord Ross.
Compearance was made for John Gray, who produced Kinauld's bond, with an arrestment in the hands of Middleton the debtor, and David Ross, Kinauld's trustee, and craved the money to be made forthcoming to him as belonging to Kinauld his debtor.
Compearance was also made for my Lord Ross, who alleged, That the money belonged to him; because albeit David Ross was originally a trustee, in so far as exceeded his own payment, yet he was ordered first to apply the money for Mr Charles's Ross's relief, and thereafter, with consent of Mr Charles Ross, was ordered to apply it to my Lord Ross; which verbal order was sufficient to convey the right of the bill to my Lord Ross, because the trust was without writ, and could no ways be instructed but by David Ross's oath, who has, as he was bound, declared the whole matter of fact, and the case is the same as if he had given a back bond in the terms of his disposition; in which case he would have been trustee, not for Kinauld, but for my Lord Ross; and for that reason David Ross declined to observe the second order without the consent of Mr Charles Ross, to whom there was jus quæsitum by the first, until he obtained Mr Charles's consent.
It was answered for the arrester; That the property of the money still belonged to Kinauld, who might alter his order at his own pleasure, because there was nullum negotium betwixt him and Mr Charles, or my Lord Ross; and whatever his apprehension was of a jus quæsitum to Mr Charles by the first order, that was but his mistake, and cannot influence the decision of the case; for all this while, my Lord Ross knew nothing of the whole affair, but laid on an arrestment as Gray did, though posterior.
“The Lords found, that the property of the superplus of the money over and above David Ross's payment remained with Kinauld; and that therefore there was place to affect the same by an arrestment.”
Fol. Dic. v. 1. p. 512. Dalrymple, No 71. p. 90.*** Forbes reports the same case:
David Ross as having right, by indorsation, to a sixty pound Sterling bill From Mr Robert Gordon, drawn by Sutherland of Kinauld, upon, and accepted by Mr John Middleton, pursued the accepter, who offered to prove by the oath of the possessor of the bill, that he was but Kinauld's trustee, and by Kinauld's oath that he had received some partial payment. David Ross deponed that by Kinauld's order and advice, he had filled up his name in the indorsation when blank, for payment to himself of 200 merks, and annualrents thereof due to him by Kinauld, and was to apply the remainder to pay a debt due by Kinauld to the Lord Ross. Upon this, compearance was made for my Lord, and also for John Gray of Newtown, both creditors to Kinauld, and arresters in the hands of John Middleton and David Ross.
Alleged for Gray of Newtown, that he ought to be preferred to the superplus sum in the bill, over and above the 200 merks, and annualrents thereof due to David Ross; in respect his arrestment in the hands of the accepter, was prior to that laid on in his hands by the Lord Ross, and both had arrested in the hands of David Ross on the same day. And the said superplus sum continued to be Kinauld's money, notwithstanding his orders to David Ross the trustee, anent the application in favours of the Lord Ross, which he could freely alter and countermand at any time before payment; in the same manner as if Kinauld having ordered David Ross to pay my Lord out of so much deposited money might re integra call back for his own money from the depositar, or order him to dispose of it otherways. Especially seeing the order was never intimated to my Lord, and he could pretend no jus quæsitum by such an order, whereof he knew no more than the man in the moon. For it is ordinary among merchants to get bills consigned from abroad, with advice to post them to such a one's accompt, and sometimes a second advice comes afterward recalling the former. But then the person in whose favours the first advice was sent never pretends any interest thereby, if countermanded before actual application, by credit given conform. And a contrary practice would destroy trade, and occasion innumerable pleas among merchants, by pursuing repetition from such as got payment of bills, by virtue of letters of advice in their favours, upon pretext that others had right to these bills by former advice, which might be proved by an exhibition of the consignatar's books and letters of advice.
Answered for the Lord Ross, that he ought to be preferred as to the remainder of the bill more than satisfied David Ross's own debt; in respect the same was in David's person for my Lord's behoof, as appears from his oath, and he cannot be obliged to denude but in the terms thereof; which oath is as good to my Lord Ross, as if the delegation in his favours had been concerted by a back-bond. Nor is it of any moment that he knew not of what past; seeing Kinauld might have ordered the payment of that debt without his Lordship's knowledge, 2do, Newtown's arresting before my Lord Ross in the accepter's hand, cannot afford him any ground of preference; because Mr Middleton was properly debtor to David Ross, by virtue of the indorsement of the bill; and arrestment was only proper in his hand.
Replied for Gray of Newtown, the oath is not in the case of a backbond or written delegation; but in case of different orders concerning the application or disposal of money deposited with a factor or trustee, whereof the property remains in the mandant, till the execution of his last orders by payment. 2do, If any back-bond had been given in the terms of the oath to Kinauld without intimation to my Lord Ross, that negotium betwixt Kinauld and his trustee, could not hinder him to destroy the back-bond, and call for his money in specie from his trustee.
The Lords found that the property of the money remained with Kinauld, and was therefore arrrestable by his creditors.