Scottish Court of Session Decisions

Lancaster for reclaimers.

Asher for respondents.

At advising—

Lord President—I feel so satisfied with the interlocutor of the Lord Ordinary, and I believe your Lordships are of the same opinion, that it is not necessary to call for an answer. The Lord Ordinary has embodied the facts of the case in certain findings, and has deduced from them a legal conclusion which I think is fairly deducible from the findings.

It appears that Shepherd & Co. were in the habit of purchasing cotton for the two Glasgow firms of Bartholomew & Co. and J. & R. Cogan, but the transactions were conducted in this way, that Robert Cogan acted for both firms in the whole matters, and the goods were purchased for and invoiced to the firm of J. & R. Cogan. Robert Cogan, who acted for both, distributed the cotton, on its arrival, in such a way as to suit both houses. As to the arrangements for paying, it seems to have been understood that Shepherd & Co. were to be entitled to draw bills for the amount against both firms, and the distribution of that liability was made matter of arrangement, that arrangement being left a good deal to Mr Shepherd of Manchester, who appropriated the bills as he thought most desirable, according to the amount of paper current at the time. This mode of dealing continued for some time. The bills sued on are two bills, one for £1706, 5s. 4d., the other for £2378, 16s. 5d., amounting together to £4085, 1s. 9d. Now, these were bills granted respectively on 22d December 1864 and 2d January 1865 by the defenders Bartholomew & Co., as two of a set of bills for the price of cotton purchased at that time, or rather for the balance of the price of cotton previously purchased. The bills, it is admitted, were not paid by the defenders or retired by them when they came to maturity, but an arrangement was made for renewing them, and there was a bill granted on 25th March 1865—that is, just on the expiry of the first bill—by J. & R. Cogan for £5571, 8s. 7d., which, it is admitted, comprehended the amount of the bills sued on. The defenders say this was just a renewal bill in the ordinary course of business; and though it was accepted by J. & R. Cogan, whereas the two bills had been accepted by Bartholomew & Co., that did not make it less a renewal bill, for it was indifferent which firm stood debtor for the time, and was a matter in which Shepherd had been allowed to exercise his own discretion in appropriating liability. The pursuer Shepherd says, I retained these two bills, and I retained them as securities, additional securities, for the sum contained in the new bill for £5571, 8s. 7d., and I thus obtained two debtors for the amount, instead of one as before. The question is, whether he was entitled to do this? It was easy for him to retain the bills, for it appears to have been no uncommon occurrence for bills not to be given up; but Shepherd says, I retained them for the express purpose of having them as an additional security. That may be, but was he entitled to do so, or has he any authority to do so? I cannot find any evidence of that. He does not himself say he was authorised by Bartholomew or J. & R. Cogan to do this. It is admitted that it was something new, and therefore either the idea originated with himself, and he did not communicate it, or it has arisen ex post facto, and that is not a very unreasonable supposition. The footing on which the renewal was granted is obvious from two letters written by Cogan to the pursuers. His Lordship then quoted from the letters, and continued—It is obvious from these letters that Shepherd must have known that the thing he was asked to do was to draw a renewal bill in ordinary form, leaving him to draw either on the one Glasgow firm or on the other, but certainly not so as to alter the ultimate liability, and still less to create a double security for that for which Shepherd held a single security before. Therefore the Lord Ordinary says that Shepherd & Co., having already ranked on the estate of J. & R. Cogan for the bill of 25th March 1865, are not now entitled to sue on the expired bills of which it was a renewal, even to the extent of ranking on the estate of Bartholomew & Co. The one security acquired by the acceptance of J. & R. Cogan was intended to supersede the previous security of Bartholomew & Co. I am therefore of opinion that we ought to adhere.