Scottish Court of Session Decisions

_________________ Footnote _________________

¹ Robertson v. Bank of Scotland, July 3, 1823 (ante, II., 450); Mein v. Sanders, March 6, 1824 (ante, II., 778); Farquharson v. Thomson, May 15, 1832 (ante, X., 526).

² Maxton v. Mackintosh's Creditors, January 17, 1777 (F. C.); Balfour v. Borth wick, January 10,1818 (F. C.,and I Shaw's App. 131).

³ Speirs v. Houston's Executors, May 22, 1829 (3 W. and S., App. 392).

^* “There are, in substance, but two points now in dispute in this action: First, What was the true charge against the defenders, under these guarantees, at the period of Logan's bankruptcy? and, Second, Whether, and to what extent, they have been discharged by any thing which afterwards took place?

“Upon the first point, the defenders maintain, that, at the date referred to, they were not liable for the whole £4500, which might confessedly have been covered by the two letters of guarantee, because the first letter, dated in November, 1810, which guaranteed drafts to the amount of £2500, applied only to such drafts as were issued between its date and that of the socond letter, of 24th December, and that these amounted to no more than £1911, 6s. 9d. But the Lord Ordinary thinks this limitation of the first guarantee quite inadmissible. Even if the second had been granted by the same party as the first, he would still have been of this opinion, and must have held it to be (as its words express) not a surrogatum for, but an addition to, the current and unretracted suretyship constituted by the former. But being by a different party, the idea that its execution could in any way supersede, limit, or stop the operation of the former, seems altogether extravagant. He takes it to be clear, therefore, that the unretired drafts, made after 24th December, 1810, were covered by both guarantees; and as these are admitted to have exceeded £2700, so the £700 which remained, after exhausting the second credit of £2000, is to be added to the £19l1 which was outstanding before that date, and will, in this way, more than exhaust the credit of £2500, also contained in the first or original obligation.

“The pursuers have endeavoured to represent the amount of unretired drafts, falling under those guarantees, as still larger than here stated, by holding that the remittances, made generally to account after their dates, roust be applied, in the first place, to a large balance which stood against Logan before that time; and that it is only after this is extinguished that they can be set against the drafts covered by the guarantees; and this, they contend, is merely following out the principle established by the House of Lords in the case with the Banton Coal Company, and recognised, in this very process, as to an anterior guarantee, dated in 1808. The Lord Ordinary, however, has not adopted this view, and he gives no judgment upon it, partly because he conceives the liability of the defenders, to the full extent of their engagement, is made out altogether independently of it, and partly because it appears to him to involve a point of very great difficulty. The inclination of his opinion, indeed, is pretty strongly against this view of the pursuers.

“His chief difficulty was as to the second point, or the effect of the actual payment by the defenders, and the rankings and recoveries of the parties on Logan's estate, in limiting or reducing the original liability of the defenders. He has no doubt that their respective rights and liabilities, at the time of the bankruptcy, were as he has stated in the fourth finding of the preceding interlocutor, and he rather thinks that this is not seriously disputed by the defenders. But they Bay that a different mode of settling, and one not in itself unreasonable or unconscientious, was voluntarily adopted and acted upon by the parties; and that, after the lapse of so many years, it is incompetent to go back upon this settlement, though a different and more advantageous one might probably have been insisted on by the pursuers, while matters were still entire.

“The facts alluded to are, that, after Logan's sequestration, and the execution of his voluntary trust, the defenders actually paid over the sum of £3000 on account of those guarantees to the pursuers; and that the pursuers accordingly only claimed and drew dividends from Logan's estate on the balance of their debt, or on £6144, instead of £9144, while the defenders, as creditors for relief, were allowed to claim and draw dividends for the £3000 they had thus advanced on Logan's account.

“Those admitted facts, which took place upwards of twenty years ago, no doubt make a plausible case for the defenders; but, considering the result to be contrary to the clear legal rights of the pursuers, and finding that it has obtained no judicial sanction, and cannot be set forward as any thing like a res judicata, and that there is no evidence or ground for presuming that the parties ever intended to sacrifice or discharge any part of their lawful claims, the Lord Ordinary, while there is confessedly no final settlement, and a large sum at all events due by the defenders, does not think it too late to make that settlement, conformable to the just rights of the parties, and to do substantial justice between them.

“If the claims and rankings on Logan's estate had taken place in a judicial sequestration, there might have been room for the plea of res judicata, even though the points now agitated had not been discussed, since they might fairly be held to have been competent and omitted; but all that was done in this case was under a private and voluntary trust, where it is not alleged that there was either the form or the substance of a judicial determination. It is sufficiently explained, too, that the pursuers, so far from ever intending to limit the responsibility of the defenders in the way now contended for, were at that time impressed with the belief, that the second guarantee, instead of being restricted to £2000, was in reality unlimited; and they have accordingly sought, though unsuccessfully, to subject them to a much greater extent than is now in question, upon this and other grounds.

“It is scarcely necessary to say, that though the defenders actually paid over £3000 at one time to the pursuers, they yet only made up the pursuers' loss to the extent of £1500 by that payment, and were themselves out of pocket by no more than that sum in consequence of it, inasmuch as they instantly drew back the other £1500 from Logan's estate, and prevented the pursuers from making that recovery for themselves. In short, they justly owed the pursuers £4500 on Logan's bankruptcy; and having truly paid no more than £1500, they are now bound to pay up the remaining £3000, and are not entitled to a discharge on any other terms.

“If this be the just view of the case, it is plain that the defenders can never be allowed to relieve themselves of half the balance for which they may be found liable, on the ground that, paying as cautioners, they would have been entitled to an assignation of the claim against the principal debtor, and enabled, under such assignation, to draw a dividend of 10s. from his estate. This is true only in the case of cautioners for the whole debt, or when the sum paid by the cautioner, together with that recoverable from the principal debtor, would be more than full payment. But neither of these is the case here; and this is merely a repetition of the fallacy on which the whole case of the defenders is bottomed.”