Scottish Court of Session Decisions

These were two suspensions of charges by the Caledonian Banking Company, the one to James Munro, tenant, Kincardine, and the other to John Macintyre, farmer, Drummuie, near Golspie, to pay the sum of £200 contained in a cash-credit bond granted by the bank to Robert Macintyre, parochial teacher and inspector and collector of poor-rates, Kincardine. There was also in each case a summons of reduction, which was held as repeated.

The suspender John Macintyre averred that in 1858 he had become cautioner to the Parochial Board of Kincardine for the intromissions of his son Robert, who in 1860 came to him and told him that as a new chairman had been elected by the board it was necessary for him to sign a new bond for the same amount as the old one. Robert then produced a document, which he pretended was the new bond referred to, and the suspender, upon the faith of his son's representations to that effect, signed the document without reading it or hearing it read, and in the belief that it was a document of the character and to the effect represented by his son.

The suspender Munro averred that in 1860 Robert Macintyre asked him to become cautioner along with his father for a sum of £40, which he proposed to borrow on the security of his life insurance policy, and that he agreed to do so. Robert Macintyre thereupon took him to the office of the respondents' agent at Bonar Bridge, where there was a bond already signed by John Macintyre and Robert Macintyre. The suspender seeing these names at once signed the document without having read it or heard it read over, and in the belief that he was signing a bond for £40 to an insurance office.

Both suspenders averred that if the signatures to the bond charged on were theirs, they must be the signatures which were obtained from them in the fraudulent manner described by each of them. They also averred and pleaded that the bank had entrusted the bond to Robert Macintyre in order to its execution, and had in this way become responsible for the fraud committed by him. They also pleaded that in the event of one or other of them being liberated by reason of Robert Macintyre's fraud or otherwise, the other was entitled to be free also. The case of Paterson v. Bonar, 9th March 1844 ( 6 D. 987), was referred to in support of this plea.

Another ground of suspension and reduction was that in each case the bond was not subscribed in presence of the alleged instrumentary witnesses, and was therefore invalid.

The suspenders proposed two issues, the first putting the question, “Whether the pursuer was induced to subscribe the bond by the false and fraudulent representations of the defenders or those for whom they are responsible;” and the second, in regard to the instrumentary witnesses. The second issue was not objected to by the defenders, but they objected to the first on the ground that there was no allegation of fraudulent representation by them, or by anyone for whose proceedings they were responsible. It was urged for the suspenders, on the authority of Paterson v. Bonar, that when a party procures; the signatures of cautioners to a cash-credit bond, the bank is liable for any deceit practised on the cautioners. They also proposed a third issue in each case in order to keep open their plea as to the one being free if the other was liberated, but it was admitted by the defenders that this plea would be quite open after a verdict.

The Court allowed the second issue, which was not objected to, and disallowed the others with expenses. The Lord President observed that the present cases were different from that of Paterson v. Bonar. In that case one of the cautioners had not subscribed the bond. Here what is alleged is that the party for whose benefit the bond was obtained had defrauded the cautioners. It seems to be quite a novelty to say that a bank is liable for such a fraud. Such a doctrine would make bonds of caution of no use at all. It is the duty of the party obtaining the credit to furnish a sufficient bond, and it would never do to hold that a bank was liable for

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the fraud of a person whose representations had been trusted to, but whose fraud would have been at once discovered if the parties had taken the trouble to read over the document before signing it.