Scottish Court of Session Decisions

This was an action of multiplepoinding and exoneration at the instance of John Agnew, brick manufacturer and coalmaster, Glasgow, principal debtor, John M'Donald and John Pyper, two of the cautioners, for payment of a composition under a deed of arrangement entered into between Agnew and his creditors, pursuers and real raisers, in which they called as defenders John White, ship and insurance broker, London, the Self-Lock Roofing Tile Company, Limited, London, and John Thorl & Company, and Julius Burckhardt, the only known partner of that firm, as such partner and as an individual, and also the other cautioners, for payment of the composition, for their interest.

The fund in medio was a deposit-receipt for the composition payable under the deed of arrangement upon a sum of £300.

The defender John White objected to the competency of the multiplepoinding on the ground that there was no double distress, and a record was made up on the competency.

The pursuer and real raisers averred that in 1897 Agnew bought and received delivery of six machines, the price of each machine being £100; that this sale was carried through by one Burckhardt, who represented himself, and was understood by Agnew to be sole partner of a firm of John Thorl & Company, who Agnew understood were the vendors; that Agnew at Burckhardt's request granted in favour of John Thorl & Company two bills for £300 each in payment of the price; that thereafter some material connected with Agnew's purchase was invoiced to him by the Self-Locking Roofing Tile Company, and that Burckhardt, on being asked for an explanation, explained that this company was the same as John Thorl & Company, and that he was the sole partner of both firms; that on 8th April 1897 the Self-Lock Roofing Tile Company, Limited (that company having been incorporated as a limited company under the Companies Acts), wrote to the defender Agnew requesting him to refuse payment of the two bills drawn by John Thorl & Company and accepted by him; that the estates of John Agnew were sequestrated on 4th December 1897, and a trustee, Mr James Taylor, C.A., Glasgow, appointed,

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but that a deed of arrangement, under which a composition was to be paid to his creditors, was accepted and approved, and that the sequestration was consequently discharged.

They further averred—“(Cond. 7) The defender John White, who alleges that he is endorsee and holder for value of a bill, dated 9th February 1897 at five months' date for £300, drawn by the said John Thorl & Company upon and accepted by the pursuer John Agnew, lodged with the said James Taylor, as trustee in Agnew's sequestration, a claim for composition upon said bill. The bill founded on by the defender White is one of the bills granted by the pursuer Agnew in payment of said tile machines. A claim was also lodged with said trustee by the defenders the Self-Lock Roofing Tile Company, Limited, a copy of which was produced and referred to. A copy of a letter addressed by said company to Messrs Thomson, Jackson, Gourlay, & Taylor, C.A., Glasgow, of which firm Mr Taylor, trustee in Agnew's sequestration, is a partner, dated 4th May 1898, is also produced and referred to. In consequence of the conflicting claims to the said bill for £300, Mr Taylor as trustee foresaid declined to grant to the defender White a certificate that he was entitled to the composition on said bill, and consequently the composition was not paid by the present pursuers. Said company now assert that they were the vendors of said tile machines, and that there was originally a bill for £600, being the price thereof, drawn by the company, but that subsequently the said Mr Burckhardt, who was the secretary of said company, arranged with the pursuer Agnew that two bills of £300 each should be substituted. They further assert that owing to there being no meeting of the directors of said company, Mr Burckhardt drew said substituted bills in the name of his firm John Thorl & Company, intending to discount them and hand the proceeds to the Self-Lock Roofing Tile Company; that he instructed his managing clerk to offer one of said bills for discount to the defender White; that the bill was accordingly so offered by the clerk, but that said defender having got possession of said bill with a view to discount, asked said clerk to call back next day for his answer, and that when the clerk called back he declined either to discount the bill or to give it up, but retained it in bad faith and without any consideration whatever.”

They also averred that White had brought an action against the present pursuers and the other cautioners for payment of the composition due on said bill for £300; that the Self-Lock Roofing Tile Company would not withdraw their claim, and insisted that the pursuers were liable in composition to them in respect of said bill; that since this action was raised the Self-Lock Roofing Tile Company had gone into voluntary liquidation, and the liquidator had intimated that he was to claim the fund on the grounds above stated, and that in consequence of the said rival claims to the composition on said debt the pursuers were not in safety to pay without judicial authority.

The defender John White pleaded—“The action should be dismissed with expenses, because … ( b) It is incompetent, and separatim, it is irrelevant. ( c) There is no double distress.”

The bill for £300 referred to on record bore to be drawn by “John Thorl & Co,” to be accepted by “John Agnew,” and to be endorsed by “John Thorl & Co.” These were the only names appearing on the bill.

The letter from the Self-Lock Roofing Tile Company, Limited, to Agnew, dated 8th April 1897, and referred to on record, was as follows:—“Please refuse payment of the two bills drawn by Messrs John Thorl & Company as our agents and accepted by you. The bills in question were each for £300 at five months from date of February 8th. Messrs John Thorl & Company left them for discounting, one with Messrs Charles Taylor & Company, 9 Fenchurch Avenue, E.C., and one with Mr J. White, 23 Great St Helens, E.C., but they have neither paid the value to us nor have they returned the documents, although we have made repeated applications to them,”

The letter from the Self-Lock Roofing Tile Company to Messrs Thomson, Jackson, Gourlay, and Taylor, dated May 4th 1898, and referred to on record, was as follows:—The original bill for £600 was drawn by the company, but subsequently Mr Burckhardt arranged with Mr Agnew that he (Burckhardt) should draw two bills of £300 each, and he promised us the cash. We neither had the cash or the bills, nor are our names on the two bills. Our proof is not for £600, but for £609, 18s., as per particulars already furnished to you.”

The claim lodged by the Self-Lock Roofing Tile Company, Limited, in Agnew's sequestration was for the sum of £609, 18s., and was made not upon the bills but upon an account for machines and other goods supplied by them to Agnew.

The Lord Ordinary ( Stormonth Darling) after hearing counsel in the Procedure Roll on 27th May 1899 pronounced the following interlocutor:—“Repels the defences for the defender John White, and decerns: Finds the said defender liable in expenses since the date of closing the record to this date: Allows an account thereof to be given in, and remits the same to the Auditor to tax and report: Finds the pursuers and real raisers liable only in once and single payment of the fund in medio, and appoints all parties claiming an interest in the said fund to lodge their condescendences and claims in ten days: Grants leave to reclaim.”

Opinion—“There are certain legal presumptions in favour of the holder of a bill, and I agree with the defender White that the acceptor would not be justified in refusing payment to the holder merely on the allegation that some one else claimed to be the seller of the goods for the price of which the bill had been drawn. The acceptor's true answer to such a claim would be that the seller's remedy was against the party who had improperly endorsed the bill to

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the holder. If, therefore, this multiplepoinding could not be supported on any better ground than that, I should hold that there was no double distress.

But as the pleadings now stand (whatever may have been their original shape) the allegation of the pursuers and real raisers is that the Self-Lock Roofing Tile Company challenge White's title as a holder in due course. They say, and the liquidator apparently maintains the contention, that the bill was drawn by their agent and was sent by him for discount to White, who improperly and in bad faith retained it without giving any value. Now that, whether well founded or not, would surely be a relevant averment in a direct action by the company against White; and if so, it seems to me that, when it is made the ground of claim by the company against the acceptor Agnew, it discloses a sufficient case of double claims on one fund to support a multiplepoinding. In other words, it gives the company an interest to see that the contents of the bill are not paid to one who, according to their statement, obtained possession of the bill wrongously from their agent, and has therefore none of the rights of a holder in due course.

I shall therefore repel the defences to the competency of the action, but, as double distress does not seem to have been well averred till adjustment, I shall only find the defender liable in expenses since the closing of the record. The direct action at the instance of White must he sisted to await the issue of the multiplepoinding.”

The defender John White reclaimed, and argued—There was here no double distress. The fund in medio was the composition due upon a bill. No claim had been made in virtue of that bill except this defender's. The Self-Lock Roofing Tile Company did not claim upon the bill but upon an open account. These two claims did not constitute double distress upon the fund in medio. If the open account referred to was in fact paid by the granting of these bills, the acceptor should have taken a receipt which would have met the claim upon the open account; and if he did not do so any consequences of his failure to do so were due to his own fault. But if the Self-Lock Roofing Tile Company were now in fact putting forward a claim upon the bill (and no such claim had been intimated by them to this defender) the position was not altered, because they could not have a claim upon the bill. Their name did not appear upon it, and no person could be liable or could sue upon a bill whose name did not appear upon it. An undisclosed principal could not sue or claim upon his agent's bill, and the intimation of any such claim by an undisclosed principal could not constitute double distress. The acceptor of a bill had no answer to the holder except a suspension. It was no answer to the holder that someone whose name did not appear upon the bill asserted that be, and not the holder, had right to it. Authorities referred to— Dalgleish v. Forrest & Miller, December 2, 1870, 8 S.L.R. 166; Bills of Exchange Act, 1882, sec. 23.

Counsel for the pursuers and real raisers and respondents were not called upon.