Scottish Court of Session Decisions

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Cite as: [1878] ScotLR 16_129, [1878] SLR 16_129

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SCOTTISH_SLR_Court_of_Session

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Court of Session Inner House Second Division.

[Sheriff of Forfarshire.

Saturday, November 23. 1878.

16 SLR 129

Nicoll

v.

Reid

(Ante, vol. xv. p. 89.)

Subject_1Proof
Subject_2Parole Evidence
Subject_3Bank Cheque.
Facts:

Where payment of an account has been made by cheque, parole evidence is competent to show under what circumstances the cheque was given.

Observations (per curiam) on the case of Haldane v. Speirs, March 7, 1872, 10 Macph. 537.

Headnote:

This was an appeal from the Sheriff Court of Forfarshire. James Nicoll sued William Reid for £66, 8s. 10d., the amount said to be due for joiner work done by the workmen of the firm of Nicoll & Reid to the defender's house. A preliminary objection to the title to sue was repelled by the Court (Nov. 15, 1877, 5 R. 137, 15 Scot. Law Rep. 89).

William Reid, the defender, had employed his son Alexander Reid, in July 1875, to execute the work of which the price was in dispute. The son was then a partner of the firm of Nicoll & Reid, joiners in Kirriemuir, the work being performed by their workmen.

On 31st December 1875 the partnership was dissolved, and the work in question was at that time valued as part of the firm assets in a settlement of the accounts between the partners. Alexander Reid, the son, died in July 1876. In October 1876 the pursuer had first demanded payment for the work. The defence to this action, on the merits, was that the work had been done by Alexander Reid as an individual, and that payment had been made to him before his death, and four cheques were produced in evidence of the payment of £42. The other circumstances of the case, so far as material, will sufficiently appear from the note to the Sheriff-Substitute's interlocutor and from the opinions of the Court.

The Sheriff-Substitute ( Robertson) gave decree for £24, 8s. 10d., the balance, thereby allowing the defender credit for the payment which he instructed by the cheques. He added this note:—

“ Note.—It is inconceivable that the defender was ignorant of a partnership which was well known in the district. When he employed his son as a joiner, he employed his son's partner as well. It is possible for one member of a firm to have private contracts in which his partner has no concern; but very special proof would be required that both employer and employed clearly understood this position, otherwise the usual rules follow
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the employment of one member of a firm. It is quite clear that the deceased Alexander Reid regarded his father's order as an order to the firm of Nicoll & Reid. The plant of the firm was employed, and wages were paid by the firm to the men who did the work. Not only so, but prior to the dissolution a valuation was made by the two partners of this very contract, so as to enable each to draw his fair share of the contract price before separating. It is of no consequence that the defender had little or no personal dealings with the pursuer.

Coming now to the payments alleged to be paid to the late Alexander Reid by his father, these can only be instructed by writ or oath of the payee in the usual way. As the Sheriff remarks in an action at present depending between the partners of this same firm—‘Parties who pay money, or who allege they have paid money, must take good care to preserve proper evidence of such payments.’

The defender may have paid all the sums he alleges in his defences, but he can only instruct four payments by writ, which amount to £42; and these are all that the Sheriff-Substitute can credit him with. It was carefully argued by the pursuer's agent that even these should not be credited. But parole evidence is here admissible to show under what circumstances the cheques were given. (See Bryce v. Young's Executors, 4 Macph. 312.) They were all granted during the progress of the work, and at distinct intervals of time. The drawing of a cheque seems to raise a presumption that a debt exists between the drawer and payee — ninety-nine cheques out of a hundred are drawn for the purpose of paying such debts. (See Lord President in Haldane, 10 Macph. 537.) If this be so, and if four cheques are granted to the partner of a firm during the progress of the work—that partner being the member of the firm through whom the whole contract was managed — the Sheriff-Substitute holds the oath of the grantee and his daughter-in-law to be conclusive that they were granted to account of this joiner work. It appears the pursuer was kept in ignorance by his partner that these payments had been made; but this is a matter between him and his late partner's executors.

Giving credit then to the defender for these payments by cheque, there still remains the question, what amount of work had the firm performed prior to its dissolution? and this part of the case has always appeared to the Sheriff-Substitute a delicate matter; for the valuation made for the information of the partners is not a document to which the defender is in any way a party. Nevertheless the Sheriff-Substitute has taken it as the only available guide to extricate the case. It seems to have been made in perfect bona fides; and the defender himself says he had paid more than the valuation to his son prior to the dissolution, which shows that the defender considered that amount of work at least had been performed by the firm up to that date.

For these reasons, the Sheriff-Substitute has decerned against the defender for the sum of £24, 8s. 10d.”

The Sheriff ( Maitland Heriot) recalled the Sheriff-Substitute's interlocutor, and decerned against Reid for the whole sum sued for—holding that the cheques could not be held to instruct the payments alleged, upon the authority of Haldane v. Speirs, 10 Macph. 537.

The defender appealed to the Court of Session, and argued that payments to the amount of £42 were sufficiently instructed by the cheques produced endorsed by Reid the son; and further, that payments to one partner were equivalent to payments to the firm.

The pursuer argued—The case of Haldane v. Speirs was in point. The cheques no doubt showed payments by the father to the son, but they did not indicate any specific work or contract under which the payment was made, and father and son might have many transactions other than this particular one. There was no presumption even from the sum paid that would refer it to any special piece of work.

Authorities— Egg v. Burnett, 3 Espinasse 195; Thomson on Bills, 257; Roxburghe & Co. v. Barlas, Jan. 15, 1876, 13 Scot. Law Rep. 215; Gibb v. Craik, 8 Jur. 421; Haldane v. Speirs, March 7, 1872, 10 Macph. 537; Ramchurn Mullick v. Luchmeechund Radakissen, February 1854, 9 Moore P.C. Reps. 69.

At advising—

Judgment:

Lord Justice-Clerk — I am of opinion that the cheques alone, with the testimony adduced, are sufficient evidence of payment so far of the account incurred. The presumption of law further favours the defender's contention. The surviving partner Nicol was of course entitled to, look upon this as a company transaction. On the other hand, there is no doubt that the contract was made directly with the son Alexander Reid, and that therefore William Reid the father was entitled to discharge it in the way in which he made it by paying the cheque to his son alone. There were several payments made in this way during the progress of the work, and Alexander Reid endorsed the cheques received by him, which proves that he got the money—a most important factor in the present case. This may be often immaterial, but here it is not so, for the payment was received from an admitted debtor. I think that in the absence of anything to show the contrary, the presumption is too strong for argument that Alexander Reid received this money in payment for this work. I think if the money is once traced to him, and no other reason for his receiving it can be given, that is sufficient to discharge the debt.

Lord Ormidale—The first question is whether Alex. Reid was entitled to make this contract. I think there can be no doubt that he was. He was entitled to get work for the firm where he could, and the firm having done the work, was not Reid's partner, the pursuer, entitled to go to the defender for payment, or did he need a mandate from the other partner who had made the contract? It is clear that he did not.

The next and really important question is whether the work undoubtedly done has been paid for by the four cheques. It is said for the pursuer that these cheques only infer payment to the son. Now, they were received by the son, and he endorsed them, but for what purpose, it is asked, and for what debt? The case of Haldane v. Speirs has been founded on by the pursuer, but it was very different from the present. It did not raise a question as to whether

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payment was proved by a cheque. It dealt with the question whether a person paying money by cheque is entitled to rear up an obligation of loan. But indeed it is rather against the pursuer here than for him, for from the opinion delivered by the Lord President, his Lordship's view appears to have been that a cheque is prima facie evidence of payment of an antecedent debt—Starkie on Evidence (3d. ed.) vol. 2, p. 79.

Now, is parole evidence admissible to prove the object for which this cheque was given. I think in point of law and equity that it is. I base my judgment without hesitation on this, that payment be-ingproved scripto, parole is competent to prove why it was made. It seems to have been an afterthought given effect to by the Sheriff that it is incompetent to prove the object of payment by parole. It would be most unjust not to allow parole to that effect if the payment itself is proved scripto.

Lord Gifford — This is a very important case. Cheques are evidence of the passing of money. If I thought that in this judgment we were disturbing the judgment in the case of Haldane v. Speirs I would be for consulting the other Division of the Court, but in the view I take of that case we are not doing so at all. There an attempt was made to rear up a new contract—one of loan — by parole, and no doubt it was held that parole is not competent to prove a loan, but it was expressly said that the presumption raised by a cheque is payment of the debt—the Lord President observing that in ninety-nine cases out of one hundred a cheque is given as payment. I concur in that statement. It would be a very unjust result were we to hold anything else, and accordingly Starkie on Evidence (vol. 2, p. 79), sets forth that “a receipt of money by a defendant on a cheque drawn by the plaintiff on his banker prima facie imports a payment and not a loan.” If a gentleman sends a cheque to his grocer, that is evidence that he means to pay him, and to refuse to allow parole proof in support of that, in case it is denied, would be very unjust. Here we have competent evidence that money passed from a creditor to a debtor, and that payment being proved scripto it may be proved by parole why it was made.

Lord Justice-Clerk — I wish to add that on this question of the admissibility of parole I take the same view as your Lordships, and though I did not rest my judgment on that ground, I do so now.

The Court pronounced the following interlocutor:—

“Recal the judgment appealed from: Find that the cheques in question were granted by William Reid and received by Alexander Reid in payment of the account libelled: Find that the endorsation of these cheques to Alexander Reid proves that he received the proceeds thereof; and that the presumption is, in the absence of any other cause of granting being alleged, that the said cheques were granted and received in payment of the admitted debt: Find, separatim, that it has been proved by the parole testimony that the said cheques were so granted and received: Therefore decern against the appellant (defender) for payment to the respondent (pursuer) of the sum of £24, 8s. 10d., being the balance of £66. 8s. 10d. sued for, after deduction of £42, being the amount of the said cheques, with interest on the said sum of £24, 8s. 10d. at 5 per cent, per annum from the date of citation until payment thereof, &c.

Counsel:

Counsel for Pursuer (Respondent)— M'Laren— J. A. Reid. Agents— Ronald & Ritchie, S.S.C.

Counsel for Defender (Appellant)— Balfour— Strachan. Agents— Macbean & Malloch, W.S.
1878