Scottish Court of Session Decisions

This was an appeal from the Sheriff-court of Aberdeenshire. The circumstances of the case were as follows:—In July 1868, Dick & Son, a brewery firm in Edinburgh, appointed a Mr Kiloh to be their agent in Aberdeen, under an agreement which provided, inter alia, that there should be a monthly settlement by bill at three months for all the beer sent to Kiloh's order during the month; that accounts should be squared once a-year; and that Kiloh should procure personal security for fulfilment of his obligations.

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The defender Mr Keith became security for Kiloh by a guarantee to Dick & Son “against all loss and damage they might sustain by or through the actings or intromissions of the said William Kiloh.”

Kiloh declared his insolvency in October 1868, and at that time several of his monthly acceptances were in currency. Dick & Son thereafter raised this action against Mr Keith for the full amount of the bills. Keith admitted liability so far, but resisted the action on the ground that he was entitled to credit for any outstanding accounts which might be recovered from Kiloh's customers by Messrs Dick & Son, and that the bills were not the measure of the loss and damage sustained by Dick & Son in consequence of Kiloh's actings.

The Sheriff-Substitute ( Thomson) found—“That by the letter of guarantee founded on, the defender ‘with reference to the obligations undertaken’ in the agreement between the pursuers and William Kiloh, and ‘in terms of the said agreement,’ guaranteed the pursuers against all loss and damage they might sustain ‘by or through the actings or intromissions of the said William Kiloh,’ to the extent of £500: That by the said agreement the said William Kiloh bound himself to settle monthly, by bill at three months, for all ales or malt liquors sent to his order by the pursuers: Finds it admitted that the pursuers supplied goods on the orders of Kiloh: That to account of the balance Kiloh granted to the pursuers his acceptances: Finds that a balance was thus due by Kiloh to the pursuers of £49, 11s. 2d.: That, on a sound construction of the above-mentioned letter of guarantee, the defender is liable to the pursuers in payment of the said balance.”

In a note the Sheriff-Substitute added—“It was ably argued on behalf of the defender—(1) That Kiloh did not undertake to stand del credere; and (2) that if he did, the defender was then cautioner for a cautioner, that the 8th section of the Mercantile Law Amendment Act did not apply, and that the pursuers were bound to discuss the principal debtor. The Sheriff-Substitute is of opinion that a del credere guarantee is implied in the terms of the agreement. The goods, it is true, were invoiced directly by the pursuers, but the amount of the commission is fixed expressly with reference to a certain guarantee to be given by Kiloh. There was to be an annual ‘squaring and docquetting’ of accounts, but it is thought that that must refer to the pursuers' undertaking to bear half the loss on bad debts. To that extent Kiloh was entitled to credit himself in future transactions. The purchasers are spoken of throughout as Kiloh's customers, and not the pursuers. Whether an agent acting under a del credere commission is in the same position as a cautioner or not seems a doubtful point in our laws. Professor Bell says that in one sense he is not, as he is liable directly without the benefit of discussion; while, on the other hand, he is not merely a delegatus debiti, as, if the agent fail, the principal may recover from the proper debtor, if the latter have not previously paid to the agent. In England it seems to have been settled that a del credere agent is truly in the position of a surety— Morris v. Cleasky, 4 Maule and Selwyn, 565 E., a case which overturns many previous decisions. But the Sheriff-Substitute is of opinion that the undertaking by Kiloh to grant his acceptances monthly for all goods sent to him by the pursuers, taken along with the other clauses of the agreement which have been referred to, render him liable whether his commission was del credere or not. Such an undertaking is equivalent to an assuming of responsibility (subject to the ‘concession’ by the pursuers of a deduction in case of the debts turning out bad), because thereby he ‘lulled all the suspicions of his employers, and caused them to dismiss all care about the solvency of the purchasers.’—Smith's Merc. Law, 7th ed., p. 120.”

The Sheriff ( Jameson) adhered.

The defender appealed.

Watson and Jamieson for him.

The Solicitor-General ( Clark) and Asher for the respondents.