Scottish Court of Session Decisions

Subject_1 BILL OF EXCHANGE.
Subject_2 DIVISION IV.

Possessor's recourse against the Drawer and Indorser.
Subject_3 SECT. II.

Negotiation of Bill.

Orr
v.
Turnbull

1791.
Case No. No 174.

The indorser of an accommodation bill, found entitled to plead the want of due negotiation, in defence against payment.

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Thomas Turnbull was drawer of a bill for L. 81, accepted by Alexander Brown and James Turnbull. It was indorsed by the drawer to John Laurie; by Laurie to Robert Turnbull; by him to Alexander Orr. Although Robert Turnbull was the last indorser, it appeared that Orr, who discounted it, gave the cash to Thomas Turnbull the drawer, in Robert's presence.

The bill fell due on 6th June 1788, and was regularly protested. It was not till 1st April 1789, that horning was executed against Robert Turnbull.

Orr having died, his nephew, his general disponee, brought an action against the drawer and indorsers in June 1790. All the parties except Robert Turnbull had by this time become bankrupt. He stated in defence, that recourse against him was lost, he having received no intimation of the dishonour in due time.

There was no evidence produced of intimation previous to the charge of horning.

Pleaded, in a reclaiming petition: This bill was not entitled to the privileges of bills originating in the course of trade. In these the drawer has effects in the hands of the acceptor; and recourse is denied, if negotiation be neglected; because the drawer cannot otherwise take the steps which may be requisite for securing his property; Erskine, b. 3. tit. 2. § 24.; M'Kenzie against Urquhart, No 137. p. 1561.; M'Adam against M'William, No 171. p. 1631.

Every new indorsation is in fact a new bill, A. against B. No 99. p. 1510. The defender, therefore, in the knowledge of the nature of the transaction, and a party in it, is in the same situation with the drawer, and is no more entitled to plead want of intimation than he is.

Accommodation bills are in themselves improper, and entitled to no favour.

Pleaded for the defender: Although it were admitted, that when the acceptor has no effects, the drawer cannot plead want of notification; the defender's plea is not injured; for, by the indorsation, he acquired a right to relief from the drawer and previous indorsers; of consequence, by his jus crediti he was entitled to require that the rules of negotiation should be observed.

There is an obvious distinction between the drawer and indorsers of an accommodation bill: The former receiving the money, has no right to relief from any one; but if an indorser shall pay, he has right to operate relief against both the drawer and previous indorsers. This interest is the criterion by which to judge whether strict negotiation is necessary or not.

Some of the Judges doubted whether a bill indorsed, in order only to give it credit, that it might be discounted by the drawer, and which did not at all pass in commercio from indorser to indorser, was entitled to the privileges of regotiation. Such indorsers, it was argued, were never cautioners. Some thought accommodation bills proceeded e turpi causa. Others were of opinion, there was no turpitude in such bills. Solvent parties, it was said, might fairly raise money in this way; and being able to repay it, they did no wrong.

The Court refused the petition, and assoilzied the indorser.

Ordinary, Lord Henderland. Act. R. H. Cay. Alt. R. Corbet. Clerk, Mitchelson.

See Session Papers in Signet Hall.