Scottish Court of Session Decisions

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Cite as: [1870] ScotLR 7_458, [1870] SLR 7_458

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SCOTTISH_SLR_Court_of_Session

Page: 458↓

Court of Session Inner House First Division.

Friday, May 6 1870.

7 SLR 458

( Ante, vol. v, p. 595.)

Shepherd & Co

v.

Bartholomew & Co.

Subject_1Bill
Subject_4Renewal — Security.
Facts:

For some years A supplied cotton, on the order of C, for the firms of C & Co. and B & Co., C distributing the cotton between the firms as he chose, and A being at liberty to draw hills on either firm for the price. A sued B & Co. on two bills accepted by them. They defended, on the ground that these bills had been superseded by a renewal bill accepted by C & Co., on whose estate A had already ranked for the amount of the renewal bill. The House of Lords affirmed the decision of the First Division, which sustained the defence, and held, after a proof, that in the circumstances A was not entitled to retain the two original bills as an additional security for the price.

Headnote:

The pursuers, who are merchants in Manchester, sued the defenders, merchants in Glasgow, for £4085, Is. 9d., being the amount of two bills, one for £1706, 5s. 4d., dated 27th December 1864, and the other for £2378, 16s. 5d., dated 2d January 1865. In January 1867 the Court allowed the defenders a proof prout de jure of their averment that these bills had been superseded and extinguished. A proof was taken; and thereafter the Lord Ordinary ( Jerviswoode) pronounced an interlocutor finding “That, for some time prior to the raising of the present action, the pursuers on the one hand, and the defenders on the other hand, were engaged in a series of transactions, in the course of which the pursuers were in the habit of purchasing cotton on commission for the firms of John Bartholomew & Company (the defenders) and of John & Robert Cogan, merchants, Glasgow, of both of which firms Mr Robert Cogan and Mr Robert O Cogan were members: Finds that the said Mr Robert Cogan took the active management of the finance department of both of the said firms: Finds that, prior to the year 1865, the orders for the said purchases of cotton were made by, and the cotton so purchased invoiced to, the said firm of John and Robert Cogan, for behoof of their own firm, and also of that of the defenders, to be allocated according to the requirements of the said respective firms for tire time: Finds that the pursuers drew bills from time to time on both of the said firms for the price of the cotton so purchased by them: Finds that such bills were not so drawn by the pursuers on said firms of John Bartholomew & Company and John & Robert Cogan, with special reference or in precise relation to the quantity of cotton which was actually allocated to each firm, but as a matter of mutual convenience, and having regard to the position of their respective pecuniary obligations and transactions at the time: Finds that, on the above footing, when the bills now sued on fell due, and were not retired by the defenders, the sums contained therein were included in a new bill, drawn by the pursuers upon, and accepted by, the said firm of John & Robert Cogan, for £5571, 8s. 7d., and bearing date 25th March 1865: And finds that the pursuers ranked on the bankrupt estate of the said John & Robert Cogan, and accepted a composition for the said bill for £5571, 8s. 7d., including therein the sums now sued for.” His Lordship therefore sustained the defences, and assoilzied the defenders.

On the pursuers' reclaiming to the First Division the Court adhered.

The pursuers appealed.

Anderson, Q.C., Mellish, Q.C., and Jordan for them.

Lord Advocate and Pearson, Q.C., in answer.

At advising—

Judgment:

The Lord Chancellor said it would be unnecessary to trouble the respondents. In this case the appellants complained of certain interlocutors of the Court of Session. The respondents carried on business in Glasgow, and were sued for payment of two bills of exchange which had been given in the course of dealing between them and the appellants and another firm of Cogan & Co., relating to the purchase of cotton. The interlocutors complained of were divisible into two sets—one of which related to the mode of proof, and the other to the merits of the case. The appellants had been in the habit of dealing with the other two firms, of buying cotton for them on the order and directions of Cogan. Cogan had ordered large quantities of cotton from time to time, to be purchased partly on account of the firm of Cogan & Co., and partly on account of Bartholomew & Co.; and the appellants drew bills on these two firms, apportioning the amount of the respective bills as they thought fit, or according to specific directions; but part of the dealing was liable only on its own bills. At the time of the present bills being drawn and accepted, there had been numerous transactions and a series of bills passing between the parties. When the bills became due, the appellants, assenting to the course of dealing, drew new bills, altering the apportionment of the sums payable by the representative firms; and the question was whether those new bills were intended to be, and were treated by the parties concerned as, substituted securities for the old bills then falling due. The first question related to the mode of proof, and the appellant contended that the only mode of proving that the old bills were discharged was by writ or oath of the appellant. It was not necessary in the present case to go into the rule of law on the subject, for if any writing was necessary, then there was such writing in the present case; but on a view of the whole facts and circumstances, it was very clear that the old bills were intended to be superseded and withdrawn when the new bills were accepted. The appellants relied upon the circumstance that the old bills were not given up to the debtor and cancelled; but, however that might be, the parties certainly did not intend that these bills should remain in operation after the new bills were made. The Court of Session therefore have taken that view; the judgment was right; and this appeal must be dismissed with costs.

Lord Westbury concurred, and said there could be no reasonable doubt upon the facts of the case. At the time the bills now sued upon fell due one of the Glasgow firms owed about £8000, and the

Page: 459↓

other owed about £6000, and the new bills altered very much these relative proportions; but it was part of the course of business that the appellants should have power to alter these proportions from time to time. The appellants made a new division of the total amount due from the Glasgow firms, as they were fully authorised to do, and though they reduced the liability of one and increased the liability of the other firm, still it could not be questioned, on the facts of the case, that when the now bills were so drawn the old bills were at an end. That was the clear understanding of all the parties, and it was only by some ingenious after-thought of the appellants that they had thought of resorting to the old bills, and founding upon them the present claim. As to any supposed difference between the English and Scotch procedure as to the mode of proof, there was no. foundation for such a contention.

Lord Colonsay said he also entirely concurred that the bills now sued upon had been superseded by the new bills. As to the rule about requiring the writ or oath of the creditor being necessary to prove that the bills were discharged, it was a misapplication of such a rule to think that it applied to the circumstances of this case, the issue to be proved being what was the course of dealing between these parties; and on the issue general evidence was clearly admissible.

Lord Cairns also concurred, and said there could be no reasonable doubt on the facts of this case that the course of dealing between the parties was that when new bills of exchange were drawn, the old bills were to be entirely withdrawn from circulation, and treated as discharged. It was only an afterthought of the appellants to bring this action, suggested by the fact that they had kept the old bills in their possession; but that made no difference. The appeal must therefore be dismissed, with costs.

Counsel:

Agents for Appellants— Murray, Beith, & Murray, W.S.

Agents for Respondents— Maconochie, Duncan, & Hare, W.S.
1870