Scottish Court of Session Decisions

John Sinclair, a flesher in inveraray, being indebted to James M'Pherson, farmer, Kilblaan, accepted a bill of exchange drawn on him by M'Pherson for £34, 6s. 9d., which ran as follows:—

“£34, 6s. 9d. Inveraray, 21 st Aug. 1882.

“One month after date pay to me or my order, within the National Bank of Scotland (Limited) here, the sum of Thirty-four pounds, 6s. 9d. sterling, value received.”

The bill was presented for payment, but not paid. It was then protested for non-payment, and noted by a notary-public as follows—“24th November 1882, A. M., N. P.” The extract registered protest bore, however, as the date of protesting the bill, not, as in the noting, the 24th November (which was a Sunday), but the 25th. Under this extract registered protest M'Pherson used arrestment to the amount of £36 sterling in the hands of Q. M. Wright, agent for the Union Bank at Inveraray, where Sinclair had an account. He thereafter raised this action of furthcoming against Wright as arrestee and Sinclair as common debtor to obtain the sum arrested, stating that the common debtor supplied goods to the arrestee and his family, and that the arrestee was indebted to him (the common debtor) to the amount of the sum arrested. Wright's defence was twofold:—(1) That the protest was not in conformity with the noting on the bill, and was invalid. The noting on the bill was dated 24th November 1882. The diligence following on that protest was inept and illegal. (2) He explained that at the date of the arrestment he owed nothing to the common debtor; that at that date the common debtor had overdrawn his account kept with the Union Bank of Scotland's branch at Inveraray, which was under his (Wright's) charge as bank agent, to the extent of £39, 4s. 1d.; and he, as agent for the bank, was responsible to the bank for that overdraft; that at the same date the amount standing on the passbook between the common debtor and himself was £25, 15s. 6d., which sum he was entitled to retain, and did retain, as against the larger balance of £39, 4s. 1d., due by the common debtor on his bank account, as above mentioned; that it was quite understood and agreed to between the common debtor and him (Wright) that the balance on the passbook should be set off against the overdraft on the bank account.

The common debtor also defended the action, maintaining that on a proper accounting the pursuer was due him a large sum, and that the bill had been extinguished by payments and counter claims.

The defender Wright pleaded—“(1) The protest founded on being disconform to the materials for the protest noted on the bill is invalid and not entitled to any faith, and the diligence following thereon is inept. (4) This defender being entitled to a right of retention against the common debtor for payment of the balance due by him on his bank account, there was no debt due by this defender to the common debtor which could be attached by the arrestment.”

The Sheriff-Substitute ( Campion) pronounced this interlocutor:—“Finds (1) that on 15th December 1882 the pursuer James M'Pherson, arrested, conform to extract registered protest, in the hands of the defender Q. M. Wright, all sums of money due by him to the common debtor John Sinclair; (2) that there was admittedly at that date a sum of £25, 15s. 6d. sterling in the hands of Wright, due as per passbook to the common debtor for meat supplied by him; (3) that it is incompetent to set off against that debt for goods supplied a sum due by the common debtor for an overdrawn account to the Union Bank of Scotland, of which the defender Wright is agent; therefore grants decree in favour of pursuer for the sum of £25, 15s. 6d. sterling, together with the expenses of process against the defender Q. M. Wright.”

“ Note.—The arrestment following upon the extract registered protest is in due form, and it is admitted that there is a sum of £25, 15s. 6d. in the hands of the defender Q. M. Wright, due per passbook to the common debtor John Sinclair.

Several defences have been set up. The first is against the protest and all diligence that followed thereon, in consequence of the bill having noted upon the face of it 24th September 1882, which was a Sunday. The bill fell due on 21st September, and there is noted on the face of it the third day after the 21st, being the 24th, but all the necessary steps are taken upon lawful and proper days and in proper form. The Sheriff-Substitute therefore repels all objections stated against the bill and extract registered protest….

There remains then what is really the chief defence to this action stated for the defender Q. M. Wright. Wright is a bank agent, and has allowed the common debtor to overdraw his account to an amount of £39, 4s. 1d. He pleads

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that he is personally responsible for this overdraft, and therefore is entitled to set off this private account to the common debtor against that due by the common debtor to the bank. This view the Sheriff-Substitute is unable to entertain. The debts are due under different circumstances and to different persons, and cannot be set off one against another. The defender may have had means of advancing to the common debtor money against the security of the sum due in passbook, but giving him permission to overdraw his account seems scarcely the most appropriate one. No authority has been given to the Sheriff-Substitute for holding that a bank agent is entitled to set off his own private debts with a client of a bank against that due to the bank by the same client. The Sheriff-Substitute is therefore of opinion that this defence also must be repelled, and the pursuer found entitled to the sum admittedly in the hands of the defender Wright due to the common debtor.”

The defender appealed, and argued—(1) The disconformity between the extended protest and the noting on the bill was absolutely fatal to it and the diligence following on it. While the noting might be extended at any time thereafter, it must be extended in a precisely accurate way, and failure to do this rendered it inoperative for the purposes of diligence—45 and 46 Vict. c. 61 (Bills of Exchange Act, 1882), sec. 51, sub-sec. 4; Barbour v. Newall, May 23, 1823, 2 S. 328. (2) It was a relevant defence to go to proof that the defender was under cautionary obligation to the bank for the common debtor's overdraft on his bank account, and had therefore a right to retain the money due on his own private account with the latter for goods supplied until he should be relieved of the overdraft for which he was responsible—More's Lecture on the Law of Scotland, vol. i., pp. 402, 403, and 406; Town of Aberdeen v. Strachan, July 1, 1709, M. 2570; Brodie v. Wilson, June 27, 1837, 15 S. 1195; Christie v. Keith, June 29, 1838, 16 S. 1224; Erskine, iii. 6.

The pursuer replied—(1) The fact that a wrong date on the noting was changed to a correct one in the extract registered protest could not render inept the diligence following on the latter. There was nothing in the Bills of Exchange Act 1882 to bring about such a result. (2) The second contention of the defender was irrelevant. There could be no right of retention, for there was no concursus debiti et crediti. The defender's debt on which arrestment was used was a private one, and could not be set off against the common debtor's overdraft at the bank. The defender was only the agent of the bank, and his position was quite distinguishable from that of an ordinary cautioner. There was no allegation that the common debtor was unable to pay the debt to the bank.

At advising—