Scottish Court of Session Decisions

Henry Grieve, clothier, Glasgow, presented a petition in the Sheriff Court of Lanarkshire at Glasgow, in which he prayed the Court to ordain James Lynn, coal merchant there, to pay him the sum of £50 sterling, with interest thereon, as the amount of a bill payable a month from its date, viz., 5th October 1880. The pursuer averred that the defender had drawn the bill upon Alexander Lynn, residing at Pollockshields, and the said bill was duly accepted by Alexander Lynn. The defender had endorsed the bill for value to the Commercial Bank of Scotland, who in turn had endorsed it also for value to the pursuer, but without recourse against the said bank. The acceptor of the bill failed to pay it at maturity on the 8th November 1880, and the defender was bound to have retired it at that time. He further averred that he was still the endorsee and holder for value of the bill, and although he had called upon the defender to retire it the latter had refused.

In reply the defender made the following averments—He was anxious to assist his brother Alexander Lynn, who had begun business in Glasgow under the firm or company name of the Clyde Paper Stock Company, and accordingly be arranged with his brother that the sum of £50 should be raised for his use by means of an accommodation bill to be discounted with the Commercial Bank of Scotland, Rutherglen. The bill founded on by the pursuer was accordingly granted, and discounted with the said bank, and the proceeds handed to Alexander Lynn for his use in this business. About the beginning of November 1880 Alexander Lynn assumed John Wilson, accountant, Glasgow, as a partner in his business, and immediately thereafter, in connection with the business, he went to America, leaving instructions with his partner to pay the bill on his behalf when it fell due. Shortly after the bill fell due, the pursuer, who was either a partner with John Wilson, or had money transactions with him, and also with Alexander Lynn, on account of which he desired to support the credit

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of both, called on the defender and urged him to renew the bill, which he declined to do.

The bill lay unpaid in the said Commercial Bank of Scotland, Rutherglen, until the beginning of January 1881. When the defender was informed of this, he on 8th January 1881 caused his agents, Messrs Fisher & Watt, writers, Glasgow, to write to the said Clyde Paper Stock Company that unless the amount due under the bill was paid forthwith proceedings would be taken thereon, and immediately thereafter the bill was met, and the defender was informed on inquiry at the bank that it had been paid on behalf of Alexander Lynn. If it was paid by the pursuer, it was so paid by him either on behalf of John Wilson or of Alexander Lynn; but the defender believed and averred that the funds were provided by John Wilson out of the funds of the Clyde Paper Stock Company (Limited). At all events, on the dissolution of the company, in settling the partnership transactions Alexander Lynn was debited with the amount of the bill as having been paid on his account. If the bill was paid by the pursuer with his own funds, it was so paid on behalf of Alexander Lynn, and for the purpose of keeping his credit good with the Commercial Bank of Scotland at Rutherglen, and for the pursuer's benefit, and to enable him to discount with the Commercial Bank of Scotland certain wind bills granted by him and Alexander Lynn. Since the bill was met Alexander Lynn had become bankrupt. In the circumstances the pursuer could have no recourse against the defender. The pursuer further explained that he had retired the bill on the credit and for the honour of both the defender and his brother.

The pursuer pleaded—“(1) The defender being the drawer and endorser of the bill founded on, was bound to have retired the same on the acceptor's failure to do so. (2) The pursuer being endorsee and holder for value of the bill founded on, and the defender having failed to pay the same, decree ought to be granted as craved. (3) The whole of the defender's material statement of facts and pleas-in-law being irrelevant, the same ought to be repelled, and decree ought to be granted as craved.”

The defender pleaded—“(1) The said bill not having been paid by the pursuer, he was not entitled to decree. (2) Otherwise said bill having been paid by the pursuer with the funds of the said Clyde Paper Stock Company, of which the said Alexander Lynn was a partner, and on behalf of the said Alexander Lynn, decree of absolvitor ought to be granted. (3) Otherwise said bill having been paid by the pursuer to support the credit of the said Alexander Lynn with said bank, and for the purpose of enabling him to discount certain wind bills to which they were parties, the pursuer had no recourse against the defender, and decree of absolvitor ought to be granted. (4) The said bill being an accommodation bill for the behoof of the said Alexander Lynn, and not having been endorsed to the pursuer during its currency, the pursuer had no recourse against the defender, and decree of absolvitor should be granted. (5) The pursuer was barred by mora and taciturnity from insisting in the present action.”

The Sheriff-Substitute ( Erskine Murray) on 3d March 1882 allowed the defender a proof of his averments by the writ or oath of the pursuer, and to the pursuer a conjunct probation by writ. He added this note:—“The cases of Adam v. Boyd, June 12, 1830, 8 S. 914, and of Rae and Hall v. Fraser, February 21, 1800, Hume's Reports, 43, seem necessarily to lead to the above result.”

On appeal the Sheriff-Principal ( Clark), for the reasons assigned by the Sheriff-Substitute, adhered to the interlocutor, and remitted to the Sheriff-Substitute for further procedure.

The defender in a minute stated that, being advised that he was entitled to a proof at large in the case, he respectfully declined the proof by writ or oath of pursuer allowed to him.

Thereafter the Sheriff-Substitute allowed the minute for the defender to be received, and in respect of his failure to lead proof held him confessed, and decerned as craved.

He appealed to the Second Division of the Court of Session, and argued—His averments on record were such as showed that the bill came into the pursuer's possession through some irregular dealing, and not in the ordinary course of business, and were such as to lead to the inference that no actual value had been given for the bill at the time. He was therefore entitled to a proof prout de jure of his averments— Ferguson, Davidson, & Co. v. Jolly's Trustee, January 22, 1880, 7 R. 500; Middleton v. Rutherglen, February 8, 1861, 23 D. 526; Campbell v. Dryden, November 25, 1824, 3 S. 226; in re Overend, Gurney, & Co., ex parte Swan, March 1868, 6 L.R., Eq. 344. If the pursuer, as he averred, had interfered as negotiorum gestor for the defender's honour, he was bound at once to have given intimation of the fact to the defender—Pothier, Traitè du Contrat de Change, art. 5, 114, p. 69.

At advising—