Scottish Court of Session Decisions

This was a suspension brought by John Renwick, builder in Glasgow, of a charge upon a bill of which he was acceptor, the chargers and respondents being the Stamford, Spalding, and Boston Banking Company.

The substance of the complainer's averments was as follows:—Requiring some accommodation in his business he was induced by a person named Charles Engelhard to entrust him with four acceptances blank in the drawer's name, and, inter alia, the one upon which the charge complained of was given, being a bill dated 2nd April 1891, for £248 18s. at three months. The inducement was the false and fraudulent assurance that they would be discounted at certain fixed charges, and the proceeds remitted in due course, and that the bills would not be parted with except upon such discount

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and remittance, the real intent being to use the acceptances as a means of extorting money from the complainer. On 21st April Engelhard wrote saying that he had got the bills drawn by his friends Robert Bertram & Company, and promising a remittance of the proceeds in a few days. In spite of letters from the complainer neither the bills nor the proceeds were sent, and on 2nd May the complainer obtained an interim injunction from the Court of Chancery against Engelhard and the alleged drawers parting with or negotiating the said bills until 8th May. This injunction was subsequently repeated until further order, and on 25th May Engelhard and the alleged drawers were ordered to deposit the bills in Court within seven days. On 7th May Engelhard still had the four bills in his possession, and the complainer ultimately recovered three of them, but the fourth was fraudulently retained and negotiated It was indorsed and received by the indorsees without value being given, after notice of the pending Chancery proceedings, and with intent to evade the orders of that Court. On 7th July, the bill being then overdue, was in the hands of a firm called Boehmer & Hertz of London, who professed to be indorsees of Deldmant & Woolf of London, who were pretended indorsees of the alleged drawers. The complainer was on 7th July called on to pay the amount of the bill to Boehmer & Hertz, as the last pretended indorsees. The chargers and respondents now asserted themselves to be holders of said bill, but if they were holders in their own right, they acquired it without value after it was overdue, and with notice that it had been obtained, issued, and negotiated by fraud. They were believed not to be holders in their own right, but to be merely giving their name as collecting agents for Boehmer & Hertz. On the chargers' first demand for payment in July, the complainer wrote them denying liability and explaining the fraud which had been perpetrated upon him.

The respondents denied that they had received the bill after notice of the Chancery proceedings, or after notice of any defect in the title of the prior holders, or that they were parties to or had knowledge of any fraud in connection with the granting or negotiating of the bill. They averred that they were holders of the bill in their own right, and that they had received it for value on 25th May from Boehmer, who was a customer of theirs, and had thus acquired it during its currency in the ordinary course of business.

The Lord Ordinary (Low) on 31st October passed the note.

The respondents reclaimed, and argued—The complaimer should be ordained to find caution as a condition of being allowed to proceed with his suspension. The Bills of Exchange Act 1882 had made no change in the law as to caution— Simpson v. Brown, June 9, 1888, 15 R. 716. Caution was dispensed with in very few cases, and only where there was a strong presumption in the complainer's favour, e.g., when the bill sought to be suspended appeared comparatione litterarum to be a forgery, or was vitiated by erasures—Mackay's Practice, ii. 192; Hamilton v. Kinnear & Sons, June 17, 1825, 4 S. 102; Simpson v. Brown, November 4, 1874, 2 R. 75. Here there was nothing to throw doubt upon the respondent's averment that they were honest holders in due course, or to implicate them in the alleged fraud of Engelhard. Indeed, it was doubtful whether a relevant case of fraud had been averred at all. Mere averments of fraud, without explanation of the manner in which it was committed, were not sufficient.

The complainer argued—The complainer could not find caution, and therefore to ordain him to do so would be to make it impossible for him to obtain redress. If a prima facie case of fraud were made out by the complainer, that would be enough to deprive the bank of the presumption in favour of a holder in due course—Bills of Exchange Act 1882, secs. 29 and 30. Such a case was made out by the correspondence, from which it appeared that the bank must have acquired the bill after it was overdue, because on 7th July the complainer had been called on to pay to Boehmer & Hertz.

At advising—