Scottish Court of Session Decisions

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Cite as: [1837] CS 16_67

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SCOTTISH_Court_of_Session_Shaw

Page: 67↓

016SS0067

Wright

v.

M'Farlane
No. 5.

Court of Session

1st Division B.

Nov. 16 1837

Ld. Fullerton, Lord Gillies, Lord Corehouse, Lord President, Lord M'Kenzie.

Thomas Wright, Suspender.— Counsel:
Sol-Gen. Rutherfurd— Milne William M'Farlane, Charger.— Counsel:
D.F. Hope— Cowan

Subject_Reference to Oath — Bill of Exchange — Indefinite Payment — Diligence. — Headnote:

A, the holder of a bill, accepted by B, indorsed it to C, in security of a debt; the bill was not paid when it fell due, and C gave a charge on it to A and B, and recovered partial payments from A: C insisted for the balance of the bill from B, who brought a suspension, pleading non-onerosity, and referred to the oath of C, who deponed that he had incurred considerable expepse in doing diligence on the bill against A; that he did this at B's desire; and that the whole sum in the bill would not suffice to pay his debt, interest, and expenses:—Held, 1st, That these statements as to expenses were extrinsic, and required to be proved otherwise than by the charger's oath; 2d, That the partial payments being indefinitely made, might be imputed by the charger in extinction of the expenses previously incurred on the bill, before being imputed to reduce the debt in security of which, the bill was held; and 3d, That, hoc statu, the letters should only be found orderly proceeded to the extent of the difference between that debt and the admitted payments, reserving the ulterior disposal of the cause till farther enquiry.

Facts:

William M'Farlane, coachmaker in Edinburgh, was a creditor on the estate of the deceased Mrs Alison for £50, 3s. 6d. Her executor, Milliken, and his brother-in-law, Harley, co-operated in winding; up her affairs. Milliken paid a dividend of 11s. 6d. per pound to the creditors, the payment to M'Farlane being £28, 17s. which reduced his debt to £21, 6s. 6d. Harley held a bill at three months for £30, dated 31st January, 1835, accepted by Thomas Wright, spirit merchant, which he indorsed to M'Farlane. That bill was not paid when due, and M'Farlane gave a charge on it for the full sum of £30, to Harley and Wright. Harley afterwards paid £15, 1s. to M'Farlane. There remained £14, 19s. of the bill for £30, unpaid, and M'Farlane intimated to Wright that the charge against him was limited to this balance, but that ultimate diligence would be done unless it was paid. Wright brought a suspension of the charge, alleging that he had got no value for accepting the bill; that it had been given to M'Farlane, by Harley, merely in security of what remained due of the debt of £50, 3s. 6d.; that M'Farlane had agreed to take a composition of 17s. 6d. on his debt, and was already overpaid; but that as he had, at all events, received £28, 17s. and £15, 1s., making £43, 18s., there only remained £6, 5s. 6d. due, and the suspender, to avoid litigation, had offered payment of £7 for a discharge, which the charger refused: and that the charge ought therefore to be suspended.

The charger made a general denial of the suspender's statement, and pleaded that he was an onerous and bona fide holder of the bill of exchange. The suspender made a reference to the oath of the charger, who deponed, that he had received from Milliken a dividend of 11s. 6d. per pound on his debt of £50, 3s. 6d. which amounted to £28, 17s.; that he offered to Harley to take 17s. 6d. per pound on the balance of his debt, if it were paid immediately in cash; that they (Milliken and Harley) could not give him cash, but gave him the bill; and the deponent told Milliken “that he (Milliken) was to be punctual in paying his proportion of the bill, and, upon the understanding that the deponent should not be put to any trouble, he consented to take the composition; but he declared, that, if they did not keep their engagement with him, he would insist on full payment;” that he relied on punctual payment; “that since the bill became due he received in partial payments £7, 1s., and two sums of £4, amounting in all to £15, 1s.; that these partial payments were all made by Harley: Depones, and adds of himself, that when the bill became due, the portion which he was to have received was not paid in terms of the agreement;” that he threatened diligence if his full debt were not paid; and “Depones, and adds of himself, that the suspender was very anxious that the deponent should proceed against Harley;” and promised to pay, if the deponent failed to recover from Harley: “that the deponent complied with the suspender's request, and charged Harley, who was twice apprehended, and from whom he received the two partial payments of £4 each, and upon his failing to recover the balance, that he proceeded against the suspender; that in consequence of these proceedings the deponent has incurred a very great expense, which, together with the balance of the full claim, still due, and interest, amounts to upwards of £30; and depones, and adds of himself, that the deponent considers himself an onerous and bona fide holder of the bill charged on.”

The suspender failed to prove that he had ever made an offer to pay £7 to the charger for a discharge.

In regard to this oath the suspender pleaded, that, as the bill had only been received by the charger in security of a sum of £21, 6s. 6d., being the balance of the charger's original debt; and as he had obtained payment of £15, 1s. to account, there remained only £6, 5s. 6d. due, at the date of the suspension; and as the charge was then insisted in for £14, 19s., it was erroneous, and should be suspended. The charger's allegation of the expenses he had incurred, were denied, and could not be proved by the charger's oath, that matter being clearly extrinsic, and not referred to his oath. And even if the expenses had been as great as the suspender alleged, and if any ground had existed for subjecting the suspender for these expenses, the charger's claim for them should have been made in an ordinary action; and they could not be summarily charged for, under cover of the bill which the charger held for a different and special purpose.

The charger answered, that the statements as to expenses were intrinsic, and were therefore proved by his oath; but that, in any event, he was ready to instruct, aliunde, the amount of expenses incurred by him, in doing diligence on the bill against Harley; that he had done such diligence at the suspender's desire; but, independently of that circumstance, as he (charger) held the bill in security of a debt of £21, 6s. 6d., he was entitled to impute all partial and indefinite payments, such as those made by Harley, in the first instance, in extinction of the expense incurred in doing diligence; that the whole sum contained in the bill would not suffice to extinguish his expenses, and the debt of £21, 6s. 6d., in security of which he held the bill; and therefore, on his proving the amount of his expenses, his charge was not only regular in form, being given on a bill of exchange, but well founded on the merits, in respect that the whole contents of the bill were truly due to him by the suspender, and Milliken, the obligants on the bill.

The Lord Ordinary “found it admitted that payments to the amount of £15, 1s. have been received by the charger to account he bill in question, and therefore, to that extent, suspended the letters: quoad ultra, found that the suspender has failed to prove non-onerosity by the charger's oath; and therefore, in regard to the balance of £14, 19s., found the letters orderly proceeded and decerned; and found the charger entitled to expenses.” ^*

The suspender reclaimed.

Lord Gillies.—I am clearly of opinion that, in the circumstances of this case, the statements in the oath respecting expenses are extrinsic. Whatever expenses may have been incurred by the charger, he must prove otherwise than by his own oath. But even if he adduces a proof of the expenses incurred by him, I doubt whether that would support a charge on the bill for its whole contents. Supposing that there are grounds for subjecting the suspender in all these expenses, I am not sure that a separate action for their amount would not be necessary at the instance of the charger, in place of giving a summary charge for them, by charging on the bill. But in the mean-time, at least, the interlocutor of the Lord Ordinary should be altered; for, laying the expenses out of view at present, there was only L.6, 5s. 6d. of the original debt due to the charger at the date of the suspension, and I am not prepared, hoc statu, to find the letters orderly proceeded to a greater amount than that.

Lord Corehouse.—I think that the interlocutor cannot, in the present shape of the process, be supported. The original debt of the charger was L. 50, 3s. 6d. He received, at different times, sums amounting to L. 43, 18s., which is within L. 6, 5s. 6d. of the full sum of L.50, 3s. 6d. The bill for L.30 was held by him only in security of the balance due on his original debt, which, at the time he acquired the bill, had been reduced to L.21, 6s. 6d. If the interest on the debt and the alleged expenses be laid out of view, there was only L.6, 5s. 6d. due to the charger at the date of the suspension, and at that date the sum of L, 14, 19s. was the amount demanded from the suspender. In support of this demand the charger has stated, under the reference, that he had incurred expenses in doing diligence on

_________________ Footnote _________________

^* “ Note.—The charge was given for the full amount of £30, but it is clear, both from the letter of the charger's agent, of the 8th of June, and from the suspender's own account in the 13th article of the Reasons of Suspension, that the diligence was ultimately enforced only for payment of the balance of £14, 19s. Against the demand so limited, the suspender pleaded non-onerosity; and referred, in the Bill-Chamber, the whole case to the charger's oath. The deposition is, in some particulars, not so clear or conclusive as might have been wished; but this is in some measure owing to the omission on the part of the suspender to press his interrogatories to the full extent. But the Lord Ordinary considers the import of the oath to he, that the bill was made over to the charger in security of the composition of 17s. 6d. in the pound, on the balance of the original debt due by Mrs Alison, under the condition of his right to recover the whole balance, if the money were not paid when the bill fell due—that the bill was not paid in terms of this condition—and that the balance of the debt, with the expenses of the legal proceedings on the bill, were more than enough to exhaust the full amount of the bill. Considering that the bill was indorsed to the charger in security, the Lord Ordinary thinks that none of these statements are extrinsic; and if the suspender had wished for a more detailed statement of the amount of the expenses, generally alleged on the oath, he ought to have put specific questions on the subject.”

the bill to such amount, that, if he recovered payment of the whole bill, he should not receive more than his balance of principal and interest on his debt, and the expenses incurred in recovering the debt, in security of which the bill was given to him. But the amount of these expenses is not proved. The charger's oath does not prove it; and even if it were proved, I am not satisfied that the charge for the full amount of the bill would thereby be justified. I am not prepared, as yet, to hold that the charge was justifiable for anything but the debt and interest. Without, however, deciding as to this, I think that the interlocutor should at least be recalled at present, and the letters found orderly proceeded only to the extent of L.6, 5s. 6d., reserving, till further enquiry be made, the disposal of the rest of the cause.

Lord President.—The charger held the bill in security of a debt of L.21, 6s. 6d. In recovering payment, he was obliged to do diligence against the obligants. After incurring some expense thereby, ho received three partial payments, amounting in all to L.15, 1s. These payments were apparently indefinite, and the charger was entitled, on receiving them, to impute them, in the first place, in extinction of his expenses. If they did not extinguish the expenses, they would not reduce the debt in security of which the charger held the bill; and it was only the excess, after extinguishing the expenses, which necessarily imputed in extinction of the debt. But there is no proof before us of the amount of the expenses incurred, or of the circumstances under which the expenses were incurred, and I therefore concur in thinking that, at present, the interlocutor should be recalled, and altered as has been suggested.

Lord M'Kenzie.—I am satisfied that every payment which was indefinitely made to the charger might be imputed by him in extinction of the expenses which he had previously incurred on the bill, before he applied it in extinction of the debt, in security of which he held the bill; but it appears clear to me that the statements as to these expenses were extrinsic. The charger must prove them otherwise than by his own oath.

The Court accordingly pronounced this interlocutor:— “Recall the interlocutor reclaimed against: find the letters orderly proceeded to the extent of L.6, 5s, 6d.; and quoad ultra, remit to the Lord Ordinary, before further answer, to enquire into and ascertain whether any or what amount of interest or expenses the charger was entitled to claim; and thereafter to proceed as shall be just, &c., reserving all questions of expenses.”

Solicitors: J. Marshall, S.S.C.— J. and W. Dymock, W.S.—Agents.

SS 16 SS 67 1837