Septennial Prescription of Cautionary Obligations, by act 5th Parl. 1695.
Subject_3 SECT. IV.
Effect of diligence during the seven years.
William Reid, and others, v. Stephen Maxwell
1780.
February Case No. No 241.
Where diligence is done within the seven years, a cautioner is not liable for annualrents that are posterior to the seven years.
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Maxwell, as cautioner of Sheills, granted to Reid and others a bond for borrowed money.
Within seven years of its date the bond was registered, and a charge for payment given upon it to the cautioner. But many years had afterwards elapsed, when, Shiells having become bankrupt, an action was brought against the cautioner.
In this action, the question occurred, to what extent, in terms of the act 1695, c. 5. the cautioner was liable for the debt; whether he was liable for the principal sum and annualrents only which fell due during the seven years, or farther, for the annualrents of all the subsequent period.
Pleaded for the cautioner: The purpose of the statute is declared in its preamble to be that of preventing debtors from leaving “a growing burden on their cautioners;” and the method by which it has effected this design, is by limiting the time within which any obligation on cautioners can exist. After the lapse of seven years, it is enacted, that cautioners become “eo ipso free from their obligation;” nor can any act of the creditor continue it beyond that period, the course of which is not, like that of prescription, subject to interruption, the statutory limitation being in its nature absolute, and not founded on any presumption which is capable of being disproved. If then, beyond the limited period, the obligation itself cannot subsist, it is impossible that any claim of interest can afterwards arise upon it; although, with respect to what shall fall due during the seven years, that may no doubt be secured by diligence, which, though done within the period, will have effect after its lapse; for this is agreeable to the object of the statute, which contains a provision to that purpose; Forbes's Institute, part 2. b. 3. c. 2. tit. 3. § 6.; Lord Bankton, b. 2. tit. 12. § 30; Erskine, b. 3. tit. § 7. 24.; Dalrymple, February 24. 1714, Mackilliken contra Monro, No 136. p. 11040.; Irvine contra Copland, No 239. p. 11043.
Answered for the Creditors: It must be admitted, that during seven years cautionary obligations subsist in full force. It has even been allowed, that diligence done within that period will preserve them beyond it, as far as they then extended. In this case a charge on the bond was timeously given, when the cautioner, in terms of his obligation, ought surely to have discharged the debt, in which case, all the interest that has since arisen on the principal would have been in the creditors pockets. Having, however, failed to do what was thus incumbent on him, is he to profit from the omission, by being allowed to retain those annualrents which he could never have touched but by wrongfully with-holding payment so long from his creditors? The statute does not countenance such an abuse. Its object was to obviate the danger resulting to cautioners from the creditors delaying to demand payment for a length of time, in which it might have become impossible for the former to operate their relief against the principal obligant. But diligence being timeously done, and cautioners sufficiently protected against that danger, the obligation of course must subsist
The Lord Ordinary found, “That the diligence which was done by the charge within the seven years, is sufficient to prove against the cautioner, the principal and whole annualrents bygone, and in time coming till payment.
The Court, however, after a hearing in presence, altered this interlocutor, and found “the cautioner liable for no more than the principal, and seven years interest.”
Lord Ordinary, Braxfield.Act. Matthew Ross.Alt. Cullen.
Fol. Dic. v. 4. p. 102. Fac. Col. No 105. p. 199.
