Scottish Court of Session Decisions

Messrs Kinloch, Campbell, & Company, merchants, 35 Robertson Street, Glasgow, and James Wright Campbell, 35 Robertson Street, Glasgow, carrying on business under the style of Kinloch, Campbell, & Company, were on 28th May 1890 charged at the instance of Samuel Cowan, publisher in Perth, to make payment to him of the sum of £527, 7s. with legal interest till paid, being the sum alleged to be due under a bill dated 4th January 1890 payable four months after date, of which Cowan was the drawer, and Kinloch, Campbell, & Company the acceptors.

Messrs Kinloch, Campbell, & Company, and James W. Campbell presented a note of suspension in which they averred—In November last the complainer J. W. Campbell, with the view of extending the business of his firm, advertised in the Glasgow Herald for a party who would be willing to put £5000 into his firm. George Hill, 56 Parliament Hill Road, Hampstead Heath, London, replied to the advertisement, and stated that if the business was a suitable one he, as principal, would put £5000 in it. It was arranged that Kinloch, Campbell, & Company should accept bills to the amount of £6250 and remit them to Hill, who within one week of receiving them should remit to them the sum of £5000. The bills were to be renewed from time to time during a period of four years. On 6th January the complainers sent Hill nine bills for sums amounting to £6250 dated on 4th, 6th, and 8th January 1890 and payable four months after date. The bill upon which the charge of payment under suspension was given was one of these bills.

Hill did not perform his part of the said agreement, and never remitted the complainers any sum whatever. Accordingly they demanded return of their bills on 23rd January 1890. Hill returned to the complainers bills for sums amounting to £5123, 16s. 6d., leaving in his hands three bills for £1126, 3s. 6d. The complainers continued to press Hill to return the remaining bills, but as he did not do so they instructed their solicitors in London to take proceedings in Court there to prevent him from parting with them and for delivery of them.

Proceedings were accordingly adopted in the High Court of Justice in England against Hill and the respondent, and on

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30th April 1890 the complainers obtained an interim injunction restraining the respondent or his agents or servants from parting with or in any way negotiating the said bill now charged upon.

The complainers stated that the respondent advertised for a party who would put £5000 into his business, and that a Mr Bowerman replied to that advertisement and suggested an arrangement similar to what Hill entered into with the complainers, and he agreed to that arrangement. The respondent sent Bowerman bills accepted by him for which he was to obtain cash. Bowerman did not send him the cash, and it is believed that in consequence the respondent required him to return the bills. This, it was believed, was done. Bowerman, however, seemed to have sent the bill in question to the respondent, who, without any authority from the complainers, drew the bill upon them. The respondent did not give any value to the complainers for the said bill. He obtained it when he knew the party into whose possession it had come was dishonest. He did not acquire it in the ordinary course of business. Besides, the bill had never been acted upon beyond the respondent adhibiting his signature.

The respondent in answer averred—When he received the bill from the holder, Bowerman, he was informed and believed that value had been given for the complainer's acceptance, and that the bill was payable absolutely at maturity. The charger himself gave value for the bill in good faith and without any knowledge of the George Hill referred to by the complainers, nor of his dealings with them. The English Court had no jurisdiction over the charger, and the interim injunction was confined to England.

The complainer pleaded—“(2) No value given for said bill. (3) The respondent having obtained the said bill outwith the ordinary course of business and in bad faith, cannot found upon it. (4) The respondent having no authority to draw the said bill cannot recover it.”

On 18th June 1890 the Lord Ordinary (Kincairney) passed the note without caution.

The respondent reclaimed, and argued—If bills were issued a holder for value could proceed against the acceptor even though the latter had received no value for the bill — Simpson v. Brown, June 9, 1888, 15 R. 716; Bills of Exchange Act 1882 (45 and 46 Vict. c. 61), secs. 20, 100.

The complainer argued—The acceptance had been fraudulently obtained, and no value had been given to the acceptor for it. The onus was therefore on the holder to show that he gave value for it—Bills of Exchange Act 1882, sec. 30 (2). The Lord Ordinary, therefore, had rightly passed the note without caution.

At advising—