Scottish Court of Session Decisions

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Cite as: [1866] ScotLR 3_16, [1866] SLR 3_16

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SCOTTISH_SLR_Court_of_Session

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Court of Session Inner House First Division.

Saturday, Nov. 10 1866.

Lord Ardmillan

3 SLR 16

Hosie

v.

Waddell.

Subject_1Discharge
Subject_2Bona Fide Payment
Subject_3Partner.

Facts:

Circumstances in which held that payment of a debt, due to a firm, made to a person who had been held out as a partner, and in the bona fide belief that he was one, was a good payment.

Headnote:

The pursuer is the widow and executrix of James Hosie, iron founder and mineral lessee, Bathgate, and she sued the defender for payment of £55, 9s. 4d. for furnishings made to him by the Bathgate Foundry Company, of which firm she alleged that her deceased husband was the sole partner. Mr Hosie died on 13th October 1862.

The defence was that the sum sued for had been paid. The defender, on 18th October 1862, paid to Angus Cameron, who was, or at least was believed by him to be, a partner of the foundry company, the sum of £25 to account. For this sum the pursuer gave credit in her summons. A few days thereafter Mr Cameron waited on the defender for payment of the balance due by him. The defender on that occasion accepted two bills for £27, 5s. and £28, 4s. 4d. respectively, drawn upon him by “Pro. Bathgate Foundry Co., Geo. Haldane,” and received in exchange the accounts against him discharged by Mr Haldane. The two bills were indorsed by Mr Cameron for the company. Mr Haldane was book-keeper and clerk to the company. The defender thereafter paid one of the two bills to Mr Cameron, and he stated on record his willingness to pay the other on the bill being delivered up to him.

The pursuer's reply to this defence was that Cameron never was a partner, but only manager, and that his authority, as well as Haldane's, to act for Mr Hosie, ceased on his death, after which the only persons entitled to uplift debts due were the pursuer and her agents. The pursuer also averred that the defender knew that neither Cameron nor Haldane had authority to act as they did.

Issues proposed for trial were reported by the Lord Ordinary (Ormidale) on 21st December 1864; but on 2d February 1865, the Court, of consent, and before answer, allowed “both parties to prove pro ut de jure the averments made by them respectively in the closed record.” A proof having been led,

Gloag (with him A. R. Clark), was heard for the pursuer on the import thereof.

Solicitor-General and Mair, for the defender, were not called upon.

The judgment of the Court was delivered by

Judgment:

Lord Ardmillan—The defence to this action is that the two bills were accepted in payment of the two accounts due by the defender, in the belief, on his part, that Mr Cameron was a partner of the Bathgate Foundry Company, and that Mr Haldane was the managing clerk. As matter of fact, the defender did accept the bills, and received discharged accounts. The questions raised are (1) whether there is evidence that Cameron was a partner; and (2), supposing this to be doubtful, whether the defender, in accepting the bills and so making payment, acted in the bona fide belief that Cameron was a partner. I am of opinion that, supposing it doubtful whether Cameron was a partner, it would be sufficient to relieve the defender if he was held out by the late Mr Hosie as a partner, and the defender was, when he made the payment, in bona fide belief that he was one. [His Lordship here referred to the case of Gardner v. Anderson, Jan. 21, 1862, 24 D. 315.] The evidence of Mrs Hosie brings out, I think, what is otherwise clear enough on the proof, that Mr Hosie did at one time intend to make Mr Cameron his partner. The same thing appears from a letter from Hosie himself in 1856. It is proved also that there was a draft agreement prepared and revised

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for the purpose of making Cameron a partner. It was never signed, but it was freely enough discussed by Mr Hosie, and he mentioned Cameron as his partner on various occasions. On one occasion he mentioned the fact in responding to the toast of prosperity to the firm at a dinner; and in letters signed by Mr Hosie for the company he speaks of “our Mr Cameron.” Then, was the defender Waddell aware of this? He swears he was, and so does Cameron. The defender had previously transacted with Cameron as the representative of the company. It can, therefore, hardly be doubted that the defender was entitled to deal with Cameron as a partner. It was once intended that he should be one, and there was no intimation of any change of intention that could possibly have reached the defender. The bills were taken on 20th October, Mr Hosie having died on the 13th. The works were carried on after Mr Hosie's death. Cameron and Haldane were both there. The defender goes and offers to Haldane, who had been in the habit of uplifting accounts due to the company, £25 in cash and the two bills. It was said that between the date of the bills and their acceptance there had been a surreptitious carrying off of the bills by Cameron. I see no evidence of that, and no reason to suppose anything of the kind. The two bills having been accepted by the defender, one of them is paid to Cameron, the other is not paid yet. In regard to the unpaid bill it is quite clear that the defender cannot be compelled to pay it without being guaranteed against claims by Cameron if he pays to Mrs Hosie. In regard to the other bill which was paid there is more difficulty, because the defender paid it before it was due in consequence of receiving a letter from Cameron asking him to cash it. Cameron says that the bill he meant to pay with the defender's money was not a foundry bill, but one of his own; but he did not tell this to the defender. If it had appeared that the defender knew that Cameron was asking premature payment of a bill due to the firm in order to pay off a private debt, that would be a serious circumstance against bona fides. There are just two other circumstances in the case. One is the Gazette notice, which I put entirely out of view, because it does not apply to the debtors of the company. The other is the evidence of Haldane, which is very peculiar. It is plain that his first statement was not that he communicated to the defender that Cameron was not a partner. He says—“I think I would tell him my opinion that Cameron was not a partner.” That is a very peculiar expression and does not amount to much. Subsequently he is got with some pressure to extend his statement, and he ultimately says he did tell him that Cameron was not a partner. But looking to his evidence as a whole, I am of opinion that his subsequent statement must be taken with the qualification suggested by his first. If the defender had the belief that Cameron was a partner when he accepted the bills, the pursuer was bound to make out that that belief had been changed. This she has not done. I think, therefore, we must hold that the defender has made a bona fide payment of this bill. To set aside that payment now on the statement made by the pursuer would be to allow her to plead a latent defect against a bona fide payment, which is inconsistent with all rules of equity.

The judgment of the Court was to assoilzie the defender in regard to the amount of the paid bill, and to dismiss the action in regard to the amount of the other, with expenses.

Counsel:

Agents for Pursuer— Wilson, Burn, & Gloag, W.S.

Agent for Defender— James Finlay, S.S.C.
1866