Subject_1 BILL OF EXCHANGE. Subject_2 DIVISION IV.
Possessor's recourse against the Drawer and Indorser.
Subject_3 SECT. II.
Negotiation of Bill.
Creditors of Macalpine and Company v. Parsons and Govett
Date: 21 January 1792 Case No. No 176.
Regular negotiation not required in accommodation-bills.
Bills drawn on persons in England are regulated by the English law.
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Thomas Jeffrey of London accepted a bill drawn on him by Macalpine and Company of Perth. It was afterwards indorsed successively to three different parties in England, the last of whom were Parsons and Govett.
Macalpine and Company having become bankrupt, it was, in a competition among their creditors, objected against the claim of Parsons and Govett, that by the failure of regularly negotiating the bill, which, though due 27th June, was not protested for non-payment till 16th July, recourse against the drawers was cut off. At the same time it was admitted, first, that the acceptor was not possessed of any of the drawers funds; and next, that before the term of payment, the acceptor and the other indorsers, as well as the drawers, were all bankrupt. Commissions of bankrupt too had issued against them all, Macalpine and Company having an estate in England; so that before the bill was payable, the acceptor's bankruptcy had been announced in the Gazette; and, within the days of grace, the bill was proved against Some of the indorsers, and against the drawers. In Support of the objection, it was
Pleaded: It is a rule resulting from the nature and object of bills of exchange, that they should be negotiated with the strictest adherence to the established regulations. No reasoning concerning equipollencies is to be admitted, nor is any room to be left on this head for doubt or conjecture.
Hence, in all cases, without exception, accepted bills, if dishonoured, ought to be regularly protested, and the dishonour to be notified in due time. For it is not Sufficient to allege, either that the acceptor held no effects belonging to the drawer, or that he was previously bankrupt; since by the acceptance he laid himself under an obligation to pay, and it was the duty of the holder in proper time to require payment; nor is it to be known with certainty that it might not then have been obtained.
Accordingly, in the case of Hart contra Glassford, recourse was denied from delay in negotiation, though the drawer had no funds in the acceptor's hands, No 148. p. 1580.
It was in like manner denied in that of Tod contra Maxwell, where the acceptor not only appears to have been without effects of the drawer's, but was bankrupt before the term of payment, No 151. p. 1583.
Answered: In general, no doubt, regular negotiation of bills is necessary to preserve recourse; but this is not a rule that admits not of exception. Such unquestionably there are in the cases of bills indorsed in security, and of those which have been indorsed after the term of payment. Nor in instances like the present is there less room for exception.
After the bankruptcy of the acceptor, when the drawers could no longer operate payment from him, what purpose could the notification serve? Besides, as the acceptor had none of the drawers effects, this being an accommodation or wind-bill, it was impossible that, from want of intimation, any loss of these could arise. Recourse therefore ought not to be precluded.
This inference is Supported by the opinion of Mr Erskine b. 3. tit. 2. § 34.; and by the decision in the case of Macwilliam, No 171. p. 1613.
At the same time it may be observed, that the circumstances which took place truly afforded the most effectual mode of notification.
But there is quite a separate ground for admitting the recourse. For the bill having been payable in England, where undeniably it would not be cut off, it is to be judged of by the English law, 13th June 1761, Brown contra Crawford, No 154. p. 1587.; 4th November 1764, Stevenson contra Stewart and Lean, No 103. p. 1518.
The Lord Ordinary reported the cause.
The Court appeared to be moved by all the different reasons stated in answer to the objection, which was therefore repelled.
Lord Ordinary, Henderland.Act. Honyman.Alt. Fletcher.Clerk, Sinclair. Stewart.
Fol. Dic. v. 3. p. 88. Fac. Col. No 199. p. 419.
