Whether debentures, as they pass by blank indorsation, have also the other privileges of bills?
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Williamson having in the year 1722 obtained a salt debenture from the customhouse at Kirkcaldy, indorsed the same blank to Henry Crawfurd, who transferred it as it stood to James Blair of Ardblair; and Blair having filled up his own name in the indorsation, transferred it to Alison in security of a debt.
When Alison came to demand payment of the debenture at the custom-house, the payment was for many years stopped on suspicion of fraud; and when at last an order was obtained for payment, he was obliged to submit to a deduction of about £100 Sterling, on account of some salt bonds due to the Crown by Williamson the creditor in the debenture.
Alison having recurred against the representatives of Williamson upon the warrandice implied in his indorsation, which ex facie appeared to have been by him made directly to Blair, it was for the defenders alleged, That notwithstanding of the indorsation being filled up as directly to Blair, yet, the true fact was, That Williamson had given the indorsation blank to Henry Crawfurd, who only transferred it to Blair; and as Henry Crawfurd was debtor to Williamson in a greater sum, instructed scripto, they pleaded compensation thereon against the pursuer, the assignee of Henry Crawfurd, by progress.
As the defenders had no other way to prove that Crawfurd had ever had any concern in the debenture but by the oath of Blair, Alison the pursuer would not have been obliged to admit the oath of Blair his cedent for an onerous cause; but it being discovered that Alison had got aliunde payment of the debt, in security whereof he had got the indorsation from Blair, and so was now but a name for Blair, the case came to stand as between Blair and the defenders.
And Blair having acknowledged the fact, that it was from Henry Crawford that he had got Williamson's blank indorsation, the Lord Ordinary found, “That he must submit to the same exception to the present action of recourse that would have been competent to Williamson against Crawfurd; and found it sufficiently instructed scripto, that Crawfurd was debtor to Williamson, and therefore sustained the compensation.” Blair reclaimed, and the Lords adhered.”
There were some of the Lords who inclined to think, that as debentures pass by a blank indorsation, it was a consequence that they could not be subject to compensation on the debt of the indorser, more than bills are. But the Court was of a very different opinion; they considered debentures as rather of the nature of blank bonds, while in use, than of bills. There is recourse on bills duly negotiated, when the porteur does not obtain payment through the insolvency of the person on whom they are drawn, because it is so provided by statute. But as there is no such provision by any statute with respect to the debentures, there is, properly speaking, no recourse at all against the indorser of a debenture. Suppose, for example, the Government should refuse to pay the indorsee, perhaps on account of deficiency in the fund allotted for the payment, or on surmises of fraud should defer the payment, and which was the very cause why the payment of the present debenture was so long postponed; no body will say that on such account there would lie any recourse against the indorser; though there was no occasion to give a particular judgment on that point, as it was not determined by the interlocutor.
It was a different question, Whether, where the indorser of a debenture has himself recovered payment of a part, or where, as the case here was, there is a deduction made from the debenture on account of other debts due to the Crown by the original creditor, there does not an action lie upon the implied warrandice. And such action was thought to lie, just as in the case of blank bonds; where no recourse was competent to the porteur, when the debtor was unable to pay, yet, if any of the intermediate porteurs had got payment, action lay against them upon the implied warrandice; or as in common assignations for an onerous cause; for in gratuitous assignations there is no implied warrandice, nor any warrandice without an express clause to that purpose. But then compensation is a competent defence against such action, as the interlocutor finds, and that upon the debt of any of the intermediate porteurs; for even a bill when it had lain long over, as this debenture has done, has been found liable to be compensated on the debt of the original creditor in it, or if any of the intermediate porteurs through whose hands it may have come, although the name of such porteur did not appear upon the face of the bill, it being habilely proved that he was once possessed of it, and thereby creditor in it.
So it was adjudged in summer session 1733. The case was, Dawson of Hemprigs accepted a bill to Ross, which Ross some years thereafter indorsed blank to Urquhart, and Urquhart transferred it to Baillie his creditor, who filled up his own name in the blank indorsation. Baillie having pursued Dawson the acceptor, he pleaded compensation upon a debt due to him by Urquhart; and Baillie having acknowledged the fact, that he had got the bill from Urquhart, the Lords sustained the compensation, although Urquhart's name no where appeared on the face of the bill.
Kilkerran, No. 2. p. 93.D. Falconer reports this case:
1750. January 12.
A debenture for £260 Sterling as the duty of foreign salt employed in curing fish, was made out at the port of Anstruther, 1722, in the name of Alexander Williamson Provost of Kirkaldy; and by him delivered blank indorsed to Henry Crawfurd, and after filled up with the name of James Blair merchant in Edinburgh; who indorsed it to Colin Alison.
Payment was not obtained till 1744, by reason of suspicion of fraud; when it was made, with deduction of £119 of debt to the Crown by Provost Williamson; for which Alexander Alison, son to Colin, pursued his representatives; and having acknowledged he was satisfied by Blair, of a debt in security whereof he got the indorsation, it was found and allowed, that all objections were competent that might be proponed against Blair.
Answered, Compensation on the debts of Henry Crawford.
The Lord Ordinary, 3d February 1749, “Found that Mr. Blair behoved to submit to the same exception to the present action of recourse that would have been competent to Williamson against Crawford.”
Pleaded in a reclaiming bill: Blair having purchased the debenture from Crawfurd in the way of trade, is not concerned with any demands the indorser might have upon him.
Answered, Blair got the debenture, as he has declared, in security of a debt, and was only to give credit for it when recovered; so considering it as a bill of exchange, he is not entitled to take it free of objections that might lie against his author; neither is this privilege competent upon bills that have lain over without negotiation; but indeed this matter ought not to be judged by the rules which apply to indorsations of bills, but those of assignations of debts, whereby the assignee is subject to all objections lying against the cedent.
The Lords, 7th November 1749, adhered.
On another bill and answers, observed, Recourse was not due as on a bill of exchange, but the claim was as it would lie against a cedent, who had himself received part of the debt assigned; which would not lie unless the assignation were onerous, and there was no presumption Crawford was here an onerous assignee.
The Lords again adhered.
Act. Wedderburn, et Lockhart.Alt. R. Craigie et D. Græme.
D. Facloner, v. 2. p. 136.
