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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Sillars v. Bowie [1866] ScotLR 2_73_1 (8 June 1866)
URL: http://www.bailii.org/scot/cases/ScotCS/1866/02SLR0073_1.html
Cite as: [1866] ScotLR 2_73_1, [1866] SLR 2_73_1
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SCOTTISH_SLR_Court_of_Session
Page: 73↓
Court of Session Inner House Second Division.
v.
Facts:
Circumstances in which held that a cautioner was entitled to operate immediate relief for payment of the balance of a sum advanced by him to pay the second instalment of a composition due by a sequestrated estate.
The facts of this case were these. The defender, a bankrupt, was discharged, on 2d April 1863, on paying a composition of 5s. 6d. per pound, in two instalments of 3s. and 2s. 6d. respectively. His
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cautioners were the pursuer and a person named Thomson, now bankrupt and dead, who concurred with him in granting certain promissory notes to his creditors for said second instalment. When these notes fell due they were dishonoured and protested for non-payment. But in order to raise money to pay the debt it was agreed between the pursuer and defender and the trustee on the defender's sequestrated estate that the defender, with the trustee's concurrence, should assign to the pursuer, ex facie absolutely, certain policies of life insurance forming part of defender's assets. Accordingly, in February 1864, an assignation was executed. Upon the pursuer getting the policies, he reassigned them to a Mr Wilson, obtaining from him a loan of £300 on their security. With this sum, and a further sum of £156, 2s. 2d. paid out of pursuer's own funds, the defender discharged said second instalments. Thereafter the pursuer raised the present action for payment of the full sum of £456, 2s. 2d. sterling, in the Sheriff-Court, Glasgow, and was met with the defence that, by the terms of a back-letter granted by the pursuer to defender on 16th February 1864, the pursuer had bound himself to take no steps towards recovering his debt or selling the policies for six months after its date, and that as the action was raised within the six months, it was premature, and fell to be dismissed. In said back letter it was acknowledged that the assignation had been granted in security only of the pursuer's advances to pay the said second instalment of 2s. 6d. per pound, and then followed the clause of the letter on which the whole case turned, and which is in these terms:—“But as I am about to negotiate a loan on said policies to meet said payments in part, and that therefore the said absolute assignation has been necessary, I agree and bind myself, upon said loan being completed, to reassign to you, at your expense, the said policies, under burden of the sums, principal, interest, and penalties, contained in said bond, and all other further sums paid by me in liquidation of said composition, and of any premium I may be called upon to pay to keep said policies in force, with interest thereon, and I bind myself also that said policies will not be sold under the bond to be granted by me for six months from this date.” The Sheriff-Substitute (Strathern) and the Sheriff (Alison) dismissed the action as premature. On advocation the Lord Ordinary (Mure) adhered. The pursuer reclaimed.
Scott and Brand for him argued—With reference to the balance of £156, 2s. 2d. to which the summons had been restricted in this Court —(1) That it was clear from the letter that only a part of the sum necessary could be raised on the security of the policies, and that the back letter did not affect the pursuer's right as cautioner in the promissory notes to operate immediate relief for payment at least of the said balance not obtained on the security of the policies. (2) That the last clause of the letter related entirely to the money to be advanced by the lender (Wilson), and that even he was not to be bound to give a credit of six months, but only not to sell the policies during that interval. (3) That the right of immediate relief was clear, that it was a favourable right, and being founded always on generous motives, should be neither taken from the cautioner nor suspended, except upon clear words to that effect. (4) That the case of the Dundee Marine Insurance Company v. Brown, 11th Feb. 1847, 9 D. 607, had no application, as here the sum was due and payable, while in that case the sum sued for was neither due nor payable.
Gifford and W. N. M'Laren, for the defender, answered that, on a fair construction of the back letter and the accompanying facts, it must be inferred that the pursuer had agreed to take no steps for six months, and that therefore, on the authority of the Dundee Marine Insurance Company v. Brown, the action Was premature, and ought to be dismissed. It was admitted that the back letter showed that only a part of the necessary sum could be raised on the security of the policies, and that the last clause restricted the lender of the £300, and not the pursuer.
The Lord Justice-Clerk — This action was raised for payment of £456, 2s. 2d. advanced by the pursuer to the defender to enable him to pay the second instalment of his composition. We are all of opinion that the Sheriff-Substitute and the Sheriff were wrong in dismissing the action. We are also of opinion that the pursuer originally asked too much. Instead of asking £456, 2s. 2d. he should have deducted the £300, which was plainly not to be made the subject of demand; but as to the balance, we think his claim is good. Therefore we sustain the pursuer's right to sue, but as he asked too much we find no expenses due to or by either side in the Court below, and in the advocation we recall the Lord Ordinary's interlocutor, decern for £156, 2s. 2d., superseding extract till the pursuer has reassigned the policies to the defender, and we find the pursuer entitled to the expenses of the advocation.
Solicitors: Agent for Pursuer— John Walls, S.S.C.
Agent for Defender— William Officer, S.S.C.