Scottish Court of Session Decisions

Ernest William Thiem, restaurateur, Glasgow, died on 7th January 1897. After his death there was found in his repositories the following document—“ Glasgow, 16th September 1886. E. W. Thiem, Esq., St Enoch Hotel. I O U the sum of two hundred and twenty-five pounds sterling, interest to be at 4 (four) per cent. per annum from date.— Alexander Collie.”

Alexander Collie was a tailor and clothier in Glasgow. The trustees under Mr Thiem's trust-disposition and settlement requested Collie to make payment of the debt, but he refused to do so.

Mr Thiem's trustees thereupon raised an action against him in the Sheriff Court at Glasgow for payment of £225, with interest at 4 per centum per annum from 16th September 1886.

The defender admitted that the I O U was holograph of him, and had been granted by him to Mr Thiem on 16th September for money lent to him. He, however, averred that he had repaid the full amount of the debt to Mr Thiem in instalments between March 1887 and January 1889, and pleaded—“(1) The sum sued for, together with the interest thereon, having been repaid by the defender to the late Mr E. W. Thiem, the defender is entitled to absolvitor, with expenses. (2) Separatim, taciturnity.”

On 26th May 1898 the Sheriff-Substitute ( Guthrie) allowed a proof.

Note.—“The pursuer maintains that the loan is admitted on record, and that payment can be proved only by writ or oath.

But this is not according to the state of the pleadings and of the law. The pursuer founds on an I O U, which would not be sufficient without explanatory proof to prove indebtedness. The proof required for this purpose may, however, he dispensed with by reason of the defender's candid admission that the I O U was granted for money lent. But the pursuer forgets that by a wholesome rule of the law a judicial admission can be founded on only subject to the qualifications attached to it by the party making it, and that whether these qualifications are intrinsic or extrinsic— Milne v. Donaldson, 14 D. 849; Picken v. Arundale, 10 Macph. 987, and other cases in Bell's Pr., sec. 2218. The pursuer, however, is at liberty to disprove the qualifications annexed to the admission, and an order for proof is made to enable him to do so. That is how the Judges express the course of procedure in such a case, as it is assumed that the pursuer has always to prove his case. Here he is found in possession of the document of debt, an element of some moment in disproving the qualification, though it may not be conclusive. If I could hold it conclusive, and the original debt proved, the contention that the defender can prove payment only by writ or oath would deserve serious consideration, but even then, though I doubt, there is some authority for holding that he has stated facts and circumstances inferring payment which require an allowance of proof.”

The pursuers appealed to the Sheriff ( Berry), who on 9th July 1898 adhered.

Note.—“The authorities place it beyond question that if the pursuers rely on the admission in the defender's pleadings, they must take it subject to the qualification of payment which is attached to it. The rule laid down in Milne v. Donaldson, 14 D. 849, has been recognised as authoritative in subsequent cases. It is true that in Picken v. Arundale, 10 Macph. 987, where the rule was applied, hesitation regarding its expediency was expressed on the part of some of the Judges; but again in Gelslons v. Christie, 2 R. 982, it was held that it could no longer be questioned. It was there said by Lord Deas—‘The pursuers are not obliged to accept the admission with its qualifications, but failing their doing so there is nothing to absolve them from proving their debt in the ordinary way.’”

The proof, which was led before Sheriff-Substitute Fyfe, brought out the following facts:—The I O U was found in Mr Thiem's repositories after his death put up with a number of documents of dept granted by other persons, including several I O Us, all of which were admittedly due and unpaid. Mr Thiem and the defender were intimate friends. Mr Thiem sold spirits, wine, and cigars to the defender, while the defender supplied clothes to Thiem, each paying regularly for what he got from the other The defender's clothes' accounts against Thiem between January 1889 and the date

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of Thiem's death amounted to £247, 13s., and were paid every year as incurred, and there was no evidence of any demand having been made by Thiem during these eight years for any payment connected with the I O U. The defender gave evidence that the loan for which the holograph I O U had been granted had been paid off as averred by him in his defences. He admitted that the loan was given for a special purpose, and that the loan and the other transactions between Thiem and himself were kept entirely separate. No writing under the band of Mr Thiem tending to instruct payment was produced. The defender led some parole evidence which he contended showed that Mr Thiem during his life had admitted to third parties that the debt had been paid.

On 9th December 1898 the Sheriff-Substitute ( Fyfe) pronounced the following interlocutor:—“Finds (1) that pursuers are the surviving and accepting trustees of the late E. W, Thiem, who died on 7th January 1897; (2) that on 16th September 1886 the said E. W. Thiem lent defender £225; (3) that defender granted and delivered to him the I O U which was found in the deceased's repositories; (4) that defender avers, but has failed to prove, that said loan was repaid: Therefore finds that at the date of the death of said E. W. Thiem defender was indebted and resting-owing to him said sum of £225, which sum he is bound to pay to pursuers as trustees foresaid: Decerns against defender for payment to pursuers of £225 sterling, with interest thereon at 4 per cent. per annum from the date hereof.”

Note.—.… “Having seen the witnesses and considered all the circumstances, I must confess that I should personally have little hesitation in concurring with these others that all the indications are against this loan being still outstanding. But I am of course bound to consider the case in the light of the legal rules which are applicable.…

The pursuers' contention is now, as it was before the order for proof, that the admitted I O U establishes the debt, and just as had it been Mr Thiem who remained alive he could only have proved his loan by defender's writ or oath, so in like manner defender can only prove the repayment of it by Thiem's writ or oath, and as there is nothing equivalent to writ, and as no secondary evidence can supply the place of Mr Thiem's oath, the defender cannot by any competent evidence now prove his averments of repayment, and so his defence must fail.

The defender, in the first place, contends that as he cannot get the oath of a dead man he is entitled to fall back upon secondary evidence, and to substitute the evidence of Mr France and Mrs Bottger for Mr Thiem's oath. He urges that suppose Mr Thiem had been alive and under reference to his oath and had gone into the witness-box and said to the Court just what he said to his wife, or even had he denied generally that the I O U was paid, if he had admitted that he used the words attributed to him by these two witnesses, the Court would at this distance of time have held defender entitled to succeed. But although this argument is ingenious, it is I think unsound, and the simple fact is that where a fact can only be proved by reference to oath of a party who is now dead, that evidence is lost unless perhaps where there is a factor or law-agent, or some such person who knows and can depone to the facts, which is not the case here.

The defender very earnestly urges that the rigidity of the rule as to proving money payments is now being relaxed by the Courts, and he refers to Bryan v. Butters (February 23, 1892, 19 R. 490) as illustrating this. But in that case all the length the Court went in the direction of liberal interpretation of the rule was to hold that the receipt of the cashier of a firm although not holograph or tested was the writ of the firm. But the difficulty of the defender in the present case does not arise upon the form of writ but upon the want of it altogether. The so-called relaxation of the rule as to writ or oath does not go further than to broaden the view of what is to be regarded as writ, and what parole evidence is permissible to set up or to explain the writ, but such cases as Bryan, or Nicoll v. Reid (November 23, 1878, 6 R. 217), and others to which the defender refers, do not support the competency of what he desires to do in this case, viz., to substitute parole evidence for non-existent writ.

Defender also urges the analogy of the relaxation of the rule in the case of bills. But this is the effect of statutory enactment only, and is not applicable to an I O U. Besides, there was reason for the relaxation in regard to bills, for bills are not always what they seem, while an accommodation I O U—although not perhaps unknown—is a rare occurrence as compared with an accommodation bill. Both parties appeal to the case of Neilson (November 17, 1883, 11 R. 119), although I do not see that it affords much aid to either. Pursuers refer to it as recognising the writ or oath rule. Defender refers to it for Lord Young's observations upon what he calls that vulgar and most familiar example of a mere acknowledgment of debt, the I O U, but his dictum, so far as I know, is the only authority in this direction. It was repeated in Welsh v. Forbes (March 18, 1885, 12 R. 851), but I gather from the opinions there that Lord Craighill and Lord Rutherfurd Clark did not assent to it in that case, and they may be assumed not to have done so in Neilson's case, where their doing so was not necessary for the decision.

The attempt to set up a loan contract by parole in Haldane v. Spiers (March 7, 1872, 10 Macph. 537) called forth elaborate conflicting opinions, but I think there is no doubt that as the law stands the defender is shut up to establish his averment of repayment by writ or oath, and that having failed to do so he must sacrifice his money to the rigidity of established rules of law in regard to the competency of evidence, which—although they will not probably commend themselves to the defender—are

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founded upon valuable principle, and are at all events recognised by legal authorities, which, despite my sympathy with the defender, I cannot ignore.

Pursuers sue for interest from the date of the I O U, 12 years ago. But there is neither statement nor evidence of a demand for payment of interest. I think the onus is on pursuers to show that the interest is resting-owing, and the only evidence on the subject is the defender's statement that he paid the interest. Having regard to this, and to the defender's plea of taciturnity, I allow interest only from the date of this decree, although I do so with some hesitation in view of the case of Cunninghame v. Boswell (May 29, 1868, 6 Macph. 890, 40 Jur. 495).”

The defender appealed, and argued—An I O U was not a document of debt; it was a mere adminicle of evidence. It was an acknowledgment that a debt was due at its date, but not an acknowledgment that a debt was due ten years after its date. It was prima facie evidence that at the time it was granted the granter was the debtor of the recipient, but the circumstances of the case could be looked at, and parole evidence could be led to prove that the debt had been paid— Williamson v. Allan, May 29, 1882, 9 R. 859; Anderson's Trustees v. Webster, October 23, 1883, 11 R. 35; Neilson's Trustees v. Neilson's Trustees, November 17, 1883, 11 R. 119, opinion of Lord Young, 124; Welsh's Trustees v. Forbes, March 11, 1885, 12 R. 851, opinion of Lord Young, 856; Paterson v. Paterson, November 30, 1897, 25 R. 144, opinion of Lord Young, 162. From the parole proof it was plain that after January 1889, when the last instalment of the debt was paid, Mr Thiem held the I O U not as an acknowledgment of debt but on behalf of the defender. The I O U was adopted from the law of England, and by the law of England an I O U taken by itself was not evidence of a loan—Byles on Bills (15th ed.), p. 33; Fesenmayer v. Adcock, 1847, 16 M. & W. 449. There was here no evidence of loan except the admission of the defender, and an admission of a debt accompanied by a statement that the debt was paid was no proof of the debt. Nothing had been established against him, for there was no evidence of the loan but his admission, which was qualified by the averment that the debt had been paid. It was really a question for a jury whether the evidence led and the whole circumstances of the case did not go to redargue the prima facie presumption arising from the fact that the I O U was found in the deceased's repositories—Taylor on Evidence, i. sec. 124. Payment might be presumed from taciturnity, and from the subsequent payment of other debts—Dickson on Evidence, sec. 621. In the present case the debt had been unclaimed for ten years. Neilson's Trustees, supra, was an authority to the effect that payment should be presumed from a long lapse of time without any claim being made. The pursuers in order to succeed must show not only that the I OU instructed a debt due at its date, but that it instructed a debt due at Mr Thiem's death—in short, that an I O U was equal to a bond. An I O U was not in the same position as a bond. Neither was it of the nature of a receipt. If it were either a bond or a receipt it would require a stamp in terms of the Stamp Acts. It was a mere item of evidence which required to be supported by further testimony, and in the present case the evidence was all against the existence of a debt at Mr Thiem's death, and had indeed convinced the Sheriff-Substitute, as he confessed in his note, that the debt had been paid.

Argued for pursuers—An I O U was an admission of liability to pay, and must therefore be either holograph or tested— Christie's Trustees v. Muirhead, February 1, 1870, 8 Macph. 461; Paterson v. Patersons, supra, The present I O U was admitted to be holograph of the defender. A holograph acknowledgment of debt was probative, and implied an obligation to repay—Stair, iv. 42, 6; Ersk. iii. 2, 22; Martin v. Crawford, June 4, 1850, 12 D. 960. An I O U, either holograph or tested, was a deliberate admission of liability by one person to another importing obligation to repay; in short it was a document of debt which remained binding per se to prove the debt until payment of the debt had been proved either by writ or oath— Robertson v. Robertson, January 9, 1858, 23 D. 693; Bowe v. Hutchison, March 19, 1868, 6 Macph. 642, opinion of Lord Deas 646; Williamson, supra, 9 R., opinion of Lord President Inglis, 864. Robertson v. Robertson, January 9, 1858, 20 D. 391, was on all fours with the present case, except that “I acknowledge the receipt of” was there substituted for I O U. Beyond proving the handwriting and the fact of delivery, which in this case were both admitted, parole proof was utterly incompetent— Haldane v. Speirs, March 7, 1872, 10 Macph., opinion of Lord President Inglis, 541. On the matter of admission of liability there was no distinction between the laws of England and Scotland with regard to I OUs, except that in Scotland proof of want of consideration did not invalidate the I O U, while in England the I O U might be impeached by proof of want of consideration. In short, an I O U was treated in England on the matter of proof required in the same manner as a promissory-note not in the hands of an onerous third party— Lawrence v. Elliot, 1861, 30 L.J., Exch. 350; Hinton v. Sparkes, 1868, L.R., 3 C.P., 161, opinion of Bovill, C.-J., 161. An I O U in Scotland was in the same position as a bill before the passing of the Bill of Exchange Act; non-onerosity was not a good defence— Law v. Humphrey, July 20, 1876, 3 R. 1192, opinion of Lord President Inglis, 1193, founding on Stair, i. 11, 7. As liability on a holograph I O U could only be restricted by a discharge proved by writ or oath, the parole proof allowed in the Sheriff Court was incompetent, but even on the facts brought out in evidence there was no proof that the debt had been discharged.

At advising—