Scottish Court of Session Decisions

In January 1901 David Snaddon, publican, Tillicoultry, raised an action against the London, Edinburgh, and Glasgow Assurance Company for £28, 10s., being the amount payable under a policy of assurance, dated 17th December 1895, granted to him by the defenders on the life of his mother, who died on 17th February 1900.

The defenders, while admitting the pursuer's claim, averred that on 12th May 1897, by bond of guarantee, he became cautioner for David Jack, their agent at Alva; that on 11th August 1897 Jack, while still in their employment, embezzled £25, the contents of a cheque in favour of Elizabeth Bernard, which came into his hands in connection with their business, that thereafter he absconded, and that the pursuer was now liable for the said sum with interest, and the defenders were entitled to set it off against the sum sued for.

In answer to this defence the pursuer pleaded, inter alia—(1) that the bond of guarantee was not probative, and (2) that the defenders had by their actings and culpable negligence deprived the pursuer of his rights of relief.

A proof was led before the Lord Ordinary ( Kyllachy), which disclosed, inter alia, the following facts:—On 8th May 1897 the defenders appointed David Jack one of their assistant superintendents as from 8th December 1896. On 12th May Snaddon signed the bond of guarantee, whereby he guaranteed the defenders against all loss, cost, charges, and expenses which they might incur by reason of Jack's making default in due payment of all money to the extent of £50 while in their employment. One of the witnesses to this bond was a clerk of the Assurance Company who had neither seen Snaddon sign nor heard him acknowledge his signature. On 11th August 1897 a crossed cheque for £25, payable to Elizabeth Bernard, a widow, was sent by the defenders to Jack to pay a claim due by the company to a Mrs Bernard. Jack forged Mrs Bernard's signature, and received the money from the bank. He sent his employers a forged receipt for the money. On 25th September he confessed the crime to the defenders' Edinburgh manager, who suspended him. On 30th September the general manager of the defenders in London wrote to the Edinburgh manager that he had been ordered by the directors to dismiss Jack, and enclosing notice to terminate his appointment. The Edinburgh manager deponed that after the receipt of this letter he served a notice on Jack terminating his engagement, but no copy of this notice was produced, and there was no further evidence of it having been served. On 8th October Jack absconded. On 11th October the matter was put into the hands of the procurator-fiscal. The defenders' general manager gave evidence that on the same date he intimated by letter to the pursuer that he was liable for over £25 as Jack's guarantor, but the pursuer denied that he had received any such letter, and averred that the first notice of the matter he had received was on 29th October, when a claim for £26, 8s. 1d. against him as cautioner for Jack was sent to him by the defenders.

On 2nd April 1901 the Lord Ordinary ( Kyllachy) pronounced the following interlocutor:—“Decerns against the defenders in terms of the conclusions of the summons,” &c.

Note.—“In this case the only question is as to the defenders' counter-claim founded on the pursuer's guarantee. It is now admitted that that guarantee is improbative, the signature of one of the instrumentary witnesses having been adhibited by one of the defenders' clerks, who neither saw the pursuer sign nor heard him acknowledge his subscription. The defenders' case, therefore, depends upon proof of rei interventus, and having considered that matter I have come to the conclusion that no rei interventus has been established.

“The guarantee in question bears to be granted ‘in consideration of the defenders appointing David Jack to be a superintendent for their company.’ It was asked and obtained from the pursuer in view of Jack being so appointed, and was so asked and obtained on 12th May 1897. It appears, however, that in point of fact Jack had been appointed superintendent so far back as December 1896, and had acted in that capacity from that date. By the terms of his appointment he required to find certain security. But in fact none was at first required. He entered upon his duties, and discharged them without security before the guarantee. And after the guarantee was obtained no change of any kind took place. He simply continued in his position, and it is not alleged that anything else followed.

In these circumstances, even if it were proved (which I do not think it is), that but for this guarantee Jack would have lost his appointment, and also that this was explained to and understood by the

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pursuer, I should have at least great difficulty in affirming that there had been here rei interventus in the proper sense—that is to say, any change of circumstances unequivocally referable to the pursuer's guarantee. But in point of fact it is, I think, the result of the evidence that it was represented to the pursuer, and that he understood that, in signing the document put before him on 12th May, he was helping his friend to a proposed promotion, and not merely to the retention of a post he already held. And that being so, it is not I think possible to hold that anything, either positive or negative, followed on the faith of the guarantee which the pursuer knew or was bound to contemplate, and which therefore barred him from resiling from his in law unconcluded engagement.

In this view it is unnecessary to decide the other points raised in the case. There is a serious question whether, when the defenders discovered Jack's defalcations, they were not in the very special circumstances bound to give the pursuer immediate notice. I express no opinion on that question. I refrain also from entering upon another matter which was also argued, viz., the defenders' duty before claiming against the pursuer to exhaust their remedies against the Union Bank. The defenders have, in my judgment, failed to make good their counter-claim, and the result is that the pursuer must have decree in terms of his summons, and with expenses.”

The defenders reclaimed, and argued—(1) Under section 6 of the Mercantile Law Amendment Act 1856 the law of Scotland was assimilated to that of England founded on the Statute of Frauds. Bonds of guarantee did not require to be probative writs, but were valid if in writing and subscribed by the person undertaking the guarantee—Bell's Prin., 10th ed., sec. 249; Walker's Trustees v. M'Kinlay, June 14, 1880, 7 R. (H.L.) 85, opinion of Lord Blackburn, 89; Wallace v. Gibson, March 19, 1895, 22 R. (H.L.) 56, opinion of Lord Watson, 65, 32 S.L.R. 724. (2) Even if a guarantee required to be a probative writ, there had been here rei interventus. (3) Notice of Jack's offence had been sent to the pursuer on 11th October. This was timeous notice. There had been no undue delay. Mere giving time to a debtor was not enough to discharge the cautioner, there must be a positive contract on the part of the creditor not to sue within a certain period, whereby the cautioner was prevented having his remedy—Bell's Prin., 10th ed., secs. 262 and 263; Orme v. Young, 1815, Holt's Nisi Prius Reports, 84.

Argued for the pursuer—(1) The Mercantile Law Amendment Act, sec. 6, only dealt with obligations in re mercatoria. This was not an obligation of that sort, and therefore the bond of guarantee required to be probative—Bell's Prin., 10th ed., sec. 249a; Bell's Comm., 7th ed., 404; Dickson on Evidence, Grierson's ed., sec. 603. (2) This improbative writ had not been made effectual by being followed by rei interventus. (3) The company had not given the pursuer timeous intimation of Jack's fault. On the defender's own showing they had given the cautioner no intimation of his offence till 11th October although they were made aware of the crime on 25th September. Further, they did not inform the police till 11th October, and thus Jack was permitted to escape with the embezzled funds. They had thus prevented the pursuer from any recourse he might have had against Jack, and prejudiced his position. In such circumstances the pursuer was liberated as cautioner— Thistle Friendly Society of Aberdeen v. Garden, June 17, 1834, 12 S. 745; Haworth & Company v. Sickness and Accident Assurance Association, Limited, February 26, 1891, 18 R. 563, 28 S.L.R. 394; C. & A. Johnstone v. Duthie, March 15, 1892, 19 R. 624, 29 S.L.R. 501.

At advising—