Lady Castlehill, v. Christian Watson, and Archibald Campbell, her Son
Date: 17 July 1760 Case No. No 67.
An equivalent-debenture passed through several hands, by simple indorsation, not bearing for value. Action was raised against the last indorsee, on the ground, that he held the debenture without value. Found, that the indorsation presumed value, as in a bill of exchange.
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William, Bishop of Murray, father to the pursues, had three precepts upon the Treasury, preceding the Union, for L. 100 each. In order to obtain payment, he assigned them to John Stuart, as trustee for the pursuer. Stuart granted a factory to David Gourlay, writer in Edinburgh, authorising him to uplift the contents of these precepts, and to account to him, or his order, Gourlay received a debenture for the said L. 300 in his own name; which he indorsed to John Cuthbert, younger of Castlehill. Mr Cuthbert again indorsed the debenture to John Watson, in the following words: “Pay the contents to John Watson, younger, merchant in Edinburgh, or order.” It was agreed, that John Watson's, executor afterwards received payment of the full contents of this debenture.
The pursuer, Lady Castlehill, brings a process against the Representatives of John Watson, setting forth, That the debenture had been indorsed to Watson, without any value, as trustee for her; and, therefore, concluding, that his representatives should be decerned to pay her the contents, with interest. The only point insisted upon in the cause, was as follows:
Pleaded for the pursuer: The indorsation of this debenture does not bear to be for value; and, therefore, the presumption is, that it was only in trust. Whatever may be the law with regard to bills of exchange, which, by a fiction, in favour of commerce, are understood to be bags of money, and transferable, from hand to hand, by simple indorsation; yet, with respect to debentures, and other writs, a simple indorsation, ordering payment, can only be constructed in law as a mandate to receive, implying an obligation to account, unless the indorsation expressly bear value received.
It frequently happens, that a number of creditors indorse their grounds of debt to one person, in order to operate payment. When such indorsations do not bear value received, they can only be constructed as a trust; and the indorsee remains bound to account, or retrocess, when upon for the purpose. If the indorsation bears value received, the indorsee is then a mandatar in rem suam; that is, he is entitled to receive and discharge on his own account, and to apply what is received to his own use: But even such indorsation, in the eye of law, is no transfer of the property. On the other hand, an indorsation to a bill, instantly conveys the property, as part of the constitutional right of bills in the commercial law.
Answered for the defenders: The debenture itself bears in gremio, that it is transferable by indorsement; and, it is certain, that the greatest number of equivalent-debentures, were in use to pass by general indorsations of that kind. A simple indorsation of a debenture fully conveyed the property to Watson; and he was not bound to account to any person. This must be the case, wherever a writing is transferable by indorsation, except where the indorsation is qualified to be for the behoof of the indorser.
The doctrine is confirmed by the debentures themselves, bearing to be transferable by indorsement. As the greatest part of them were in use to be conveyed in this Manner, this is a demonstration that the law was so understood. It would give rise to very great confusion, and many law-suits, if every person, to whom a debenture has been conveyed, by a general indorsation of this nature, should be found liable to account for the value.
No reason appears for establishing a difference betwixt bills of exchange and debentures, as they are equally transferable by indorsement. In both cases, the simple indorsation is a mandate in rem suam; which entitles the indorsee to receive the money for his own account.
The case put, of creditors conveying their debts to a common agent, cannot affect the present question: For, in such a case, where the indorsation is not for value, it always bears to be for the behoof of the indorser; which, without doubt, renders the indorsee accountable.
‘The Lords assoilzied the defenders; and decerned.’
Act. Montgomery.Alt. Scrymgeour.Clerk, Gibson.
Fol. Dic. v. 3. p. 77. Fac. Col. No 237. p. 432.
