Scottish Court of Session Decisions

This was an action for £35, 12s being the amount due on a bill by the defenders to the pursuers. The defenders admitted that they had not paid the sum sued for, and explained that they “found it necessary to compound with their creditors, and offered a composition which was accepted by them, including the pursuers of the present action. In payment of the said composition on the pursuers' debt, the defenders through their agents on 25th July 1879 sent the pursuers a promissory-note for £8, 15s. 6d., payable by three equal instalments at four, eight, and twelve months. The pursuers duly received and retained the said bill until 27th May 1880, when it was returned to the defenders by the pursuers' agents. The pursuers failed to present the said bill when the first and second instalments became due. Had the pursuers presented the bill as they ought to have done, these instalments would have been duly paid by the defenders, who now tender payment thereof.” In answer the pursuers explained “that the defenders offered a small composition, which the pursuers refused, but the pursuers offered to accept 10s. per R. This offer the defenders declined. The defenders sent a bill for the smaller composition in disregard of the pursuers' refusal to accept it, and the bill lay with the pursuers unnoticed for some time, until it was returned by pursuers' solicitor on or about 24th May 1880.”

The pursuers pleaded—“(2) The pursuers having declined to agree to the composition proposed, and not having accepted the bill referred to by the defender under said composition arrangement, nor received payment thereof, but returned the same, are entitled to decree.”

The defenders pleaded—“(1) The pursuers having accepted of a composition on their debt, and the defenders having been all along quite willing to pay the said composition, the pursuers are not entitled to insist on payment of their original claim.”

The Sheriff-Substitute ( Hallard) pronounced the following interlocutor:—“Finds that the defenders having become embarrassed in their circumstances, proposed a composition contract to their creditors: Finds that having been applied to for consent of this transaction, the pursuers expressly declined the same: Finds that notwithstanding said refusal the defenders sent to the pursuers a composition bill for £8, 15s. 6d., payable in equal instalments: Finds that said bill was sent to the pursuers on 25th July 1879, and was retained by them till 27th May 1880: Finds that by such retention of the composition bill the pursuers are barred from insisting in their original claim: Sustains the defences to that effect: Dismisses the action; reserving to the pursuers their right to insist for the composition due on their debt.”

He added this note:—“This is a short point, and, it is thought, a clear one. It is quite certain that the proposed composition was expressly declined. When the composition bill came to the pursuers their duty was quite clear. They should immediately have sent it back. When their agent was made aware of the situation he at once told them to send back the bill. But it was too late. The pursuers must suffer the penalty now of not having sent it back at the first. It will not do for them to say that the bill lay beside them ‘unnoticed.’ They cannot hold the composition bill for ten months and then sue for their original debt in full.”

The Sheriff ( Davidson) adhered.

The pursuer appealed.