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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Murray v. Lee [1882] ScotLR 19_778 (5 July 1882)
URL: http://www.bailii.org/scot/cases/ScotCS/1882/19SLR0778.html
Cite as: [1882] SLR 19_778, [1882] ScotLR 19_778
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SCOTTISH_SLR_Court_of_Session
Page: 778↓
Court of Session Inner House Second Division.
[Sheriff of the Lothians.
(Before
v.
Facts:
A granted to B, his creditor, a promissory-note payable at one month. C granted to B a letter of guarantee undertaking to see the sum for which the note had been granted paid at the rate of so much a-month. A failed to pay the first monthly instalment, whereupon B protested the note for the full amount, and poinded the goods of A, who in consequencee became bankrupt. B then called on C to pay the amount in the promissory-note as cautioner. Held that B's proceedings against A constituted sufficient breach of the contract between B and C to discharge the latter's cautionary obligation.
In July 1881 Thomas Murray, farmer, Braidwood, the pursuer, obtained decree in the Sheriff Court of Edinburgh against Joseph Sharp, horse-dealer in Gilmerton, for £37, 4s. 10d. as the price of certain cattle supplied to him by the pursuer, and 18s. 3d. as the expenses of process, and on the following day the pursuer proceeded to charge Sharp to make payment within ten days. At the expiry of the charge, and when the pursuer was about to poind the effects of his debtor, the latter called at the office of the pursuer's agent, and proposed to pay a sum of £10 to account of the sums decerned for and the expenses of diligence; to pay a like sum of £10 monthly thereafter till the whole debt should be paid off; and to grant a bill along with the defender J. B. W. Lee, S.S.C., for payment of the full balance due to him. A promissory-note was thereafter granted to the pursuer by Sharp for £29, 4s. 1d. as the adjusted balance then due by him.
The promissory-note was not subscribed by the defender, who in lieu thereof wrote on August 13th the following letter to the pursuer's agent:—“Dear Sir,—Mr Joseph Sharp, Gilmerton, is due Mr Thomas Murray, farmer, Braidwood, Penicuik, some £29 or thereby, and proposes to pay it at the rate of £10 a month by bill or otherwise. He has asked me to say that I will see the £29 paid
Page: 779↓
at the rate of £10 a-month from this date, and I undertake that it will be so paid by him.” The note as actually drawn was at one month, but the defender maintained on record and in evidence that it was signed blank by Sharp on the understanding that it was to be drawn at three months. Sharp having failed to make payment of the first monthly instalment due by him, the pursuer, on 29th September, protested the promissory-note for the full amount, and charged upon it, and finally poinded Sharp's effects on 6th October. No intimation of the non-payment of the first instalment was made to the defender. Sharp thereupon took out sequestration.
The present action was raised by Murray in the Sheriff Court against the defender for payment of the amount in the promissory-note as cautioner of Sharp under the above letter of guarantee.
The defender pleaded, inter alia—“(4) In a single transaction, if the surety has engaged on the footing of a credit of a certain extent in point of time, the creditor can in no sense abridge the time without the surety's consent. (5) The pursuer's proceedings being in breach of the arrangement to take £10 a-month, the defender ought to be assoilzied.”
The Sheriff-Substitute ( Hamilton) found that the letter of guarantee founded on applied to the debt sued for, and that the defender had not established any sufficient grounds for refusing to pay said debt; and adding the following note:—“The Sheriff-Substitute does not care to inquire whether when Sharp signed the promissory-note in Mr Forsyth's office it was blank as regards the term of payment, because he is satisfied that the note as actually drawn was in accordance with the arrangement between the parties. The pursuer was entitled to demand the fullest security for his debt. A three months' bill would have been of no use to him. What he wanted was a document upon which he could operate at once if the first monthly instalment were not paid when due, and such a document Sharp was not in a position to decline to give.
“If the Sheriff-Substitute is right in this view there is an end of the case. When Sharp failed to meet the first monthly instalment the pursuer was entitled to do diligence upon the promissory-note.
There is nothing in the objection that the defender did not get timeous notice of the non-payment of the instalment, or of the dishonour of the promissory-note. The pursuer was not bound to give him any special notice.”
The defender appealed to the Court of Session.
Authorities—Bell's Comm. i. p. 392; Bacon v. Chesney, 1 Starkie, 192.
At advising—
The result depends (1) on the contract between the pursuer and the defender, and (2) on the proceedings taken against Sharp by the pursuer. We have nothing to do with the incident of a similar contract between the pursuer and Sharp, the principal debtor. Was there a contract between the pursuer and the defender as to the way in which the pursuer's debt was to be recovered from Sharp? If there was, what was that contract? These are the cardinal points, and once they are fixed the case is as good as determined.
The contract is set forth in the letter of 13th August 1881. My reading of this letter brings out an obligation on the part of the pursuer to exact payment from Sharp only by monthly instalments, and even if there should be a failure on the part of Sharp to pay as the instalments became due the pursuer was not to be entitled to turn upon Sharp for immediate payment of the full debt, just as if an arrangement for payment by instalments had not been concluded. This, no doubt, was a limitation of the rights which, apart from contract with the defender, the pursuer might have exercised; but then the pursuer obtained as the consideration for this surrender an obligation from the defender to see paid as they became exigible the instalments by which payment of the debt had been promised.
This being, as I think, the contract, the question next to be considered is, Whether that contract was observed? I am of opinion that it was not. Upon the noting of the bill I make no observation; but on the 29th of September the protest for non-payment of the full contents was recorded, and on the 5th October the goods of the principal debtor were poinded; other creditors took alarm, and the consequence was the sequestration of Sharp's estates. This result probably was injurious to the defender. Had things been allowed to proceed in the way anticipated and contracted he might have been able to recover from Sharp such instalments of the debt as he had paid, whereas by sequestration the most that could be hoped for would be the dividend which the estate might afford. But breach of contract is enough for the defence, and this, I think, was committed when the pursuer proceeded against the principal debtor for the whole debt instead of demanding payment from the defender of the first instalment which Sharp had failed to pay.
For these reasons I think the appeal should be sustained, the interlocutor decerning recalled, and the defender assoilzied.
The Lords sustained the appeal, recalled the Sheriff-Substitute's interlocutor, and assoilzied the defender.
Counsel for Pursuer (Respondent)— Rhind. Agent—Party.
Counsel for Defender (Appellant)— Nevay. Agent— David Forsyth, S.S.C.