United Kingdom House of Lords Decisions

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Cite as: [1801] UKHL 4_Paton_261

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SCOTTISH_HoL_JURY_COURT

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(1801) 4 Paton 261

CASES DECIDED IN THE HOUSE OF LORDS, UPON APPEAL FROM THE COURTS OF SCOTLAND, FROM 1753 TO 1813.

No. 39

Robert Lee, Merchant in Greenock, Appellant

v.

Messrs. Murdoch, Roberton, & Co., Merchants in Glasgow, and Walter Ewing M'Lae, Trustee on their sequestrated estate, Respondents

House of Lords, 26th Nov. 1801.

Subject_Bill — Vitiation — No Value — Copartnership. —

A bill was granted by a member of a firm in the Company name, to a banking company, without the knowledge of the Company, for £1000. It was thereafter renewed to the same individual for £1068, being the principal sum of the original bill, and interest. In action
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raised against the appellant, on the second bill, two objections were stated; 1. No value. 2. The bill was vitiated, by an erasure and alteration in it, from payable on demand to payable one day after date. On report to the whole Court, the Lords of Session sustained the claim to the extent of the sum of £1000 in the original bill, with interest. Reversed in the House of Lords, without prejudice to the respondents bringing a new action on the original bill for £1000.

Robert Lee, merchant in Greenock, the appellant's father, was partner in the house of Lee, Rodgers and Co., merchants in Glasgow, of which firm Robert Donald, Hugh Colquhoun, and James Wilson, were partners. This business was dissolved in 1783.

Robert Donald, one of their number, was a shareholder or partner, at sametime, in the house of Speirs, Murdoch and Co., bankers; and, besides his interest in stock, had a credit in that bank to the extent of £1000, for which Lee, the appellant's father, and Colquhoun, were sureties; but the cautioners were secured against this by Donald's stock, amounting to £4000.

The banking company of Speirs, Murdoch and Company, was dissolved by the death of Speirs, in the beginning of the year 1784, but was continued by Murdoch, Robertson and Co., who, two years after the dissolution of the firm of Lee, Rodgers and Co., wrote the appellant's father, stating that they held the acceptance of that company for £1068.19s. 7d., and requesting payment. At such a demand Mr. Lee was not a little surprised. It was the first time he had heard of the bill. And, on appointing a meeting with Mr. Robertson regarding it, he found the transaction to stand thus: Donald, who had a credit with the bank, had overdrawn that credit to the extent of £1000, and, in order to hide this from the bank, he had taken it upon him to draw out an acceptance in the company name of Lee, Rodgers, and Co., without their permission, to serve his own individual purpose with the bank; and the bill now demanded of £1068. 19s. 7d. was a renewal of that bill, with interest. When examined on this occasion, it bore to be payable on demand. On ascertaining that this was the nature of the transaction—that this was not a company transaction, but an unwarrantable use of the company name, and that no value had been received for it, he refused payment, whereupon the present action was brought for payment of the £1068. 19s. 7d. bill against Lee, the only surviving partner.

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The defence stated to this action was, that Lee, Rodgers, and Company had never received value for the bill; that the bill itself was erased and vitiated, in so far as the words “payable on demand,” which had stood originally a part of the bill, were erased, and the words, “one day after date” substituted in their place; the object wished to be gained by this alteration, as was stated, being to subject Mr. Lee in the payment of interest upon the contents of the bill, from the month of February (being its date); And, finally, that the bill had been granted long subsequent to the dissolution of the concern.

Dec. 4, 1799.

The Lord Ordinary ordered informations on the point, for the consideration of the whole Lords; and their Lordships, of this date, pronounced this interlocutor:—

“Find the defender liable to the pursuers for the sum of £1000, contained in the original bill granted by Lee, Rodgers, and Company, with the interest due thereon, and remit to the Lord Ordinary to allow the pursuers to amend their libel to that effect, and proceed and determine as to his Lordship shall seem just.”

As this judgment seemed virtually to sustain the objection to the vitiation of the bill, £1068. 19s. 7d., for which payment was concluded; but decerned for payment of the original bill of £1000, which was not concluded for in the summons, both parties reclaimed, the respondent praying the Court to vary the terras of the interlocutor.

Feb. 11, 1800.

The Court, on advising, pronounced this interlocutor:—

“Find, that the meaning of the Court, when they pronounced the judgment reclaimed against, was to sustain the claim of the pursuers to such an extent, as that the same should not exceed the sum of £1068. 19s. 7d., and interest thereof from the 23d day of February 1786, until payment: Find the defender, Robert Lee, liable in these sums accordingly; and, with this explanation, adhere to their former interlocutor; and, farther, find the defender liable in the full expense of extract; but in no other expenses.”

Against these interlocutors the present appeal was brought.

Pleaded for the Appellant.—The bill, which is the foundation of the present action, is erased and vitiated in substantialibus, and therefore void, and not good to sustain action for the contents thereof. Nor is the assertion either true or proved by the respondents, that the alteration was made with

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the consent of the acceptors. This allegation is not only without evidence, but is inconsistent with the declarations of Robertson and Walker, and, in the circumstances of a dissolved company, and the fact that this was a private transaction of Donald's own, altogether incredible. The instrument here has been fraudulently vitiated, not because of the uncertainty of their original tenor, but because in law the alteration necessarily cancels the original instrument; and, in refusing action on such vitiated bill, both the laws of England and Scotland agree. The bill was also rendered void and null, under the several statutes regulating the stamps for bills of exchange, where the alteration rendered a new stamp necessary. Separatim, As no value was given to Lee, Rodgers and Co. for the bill, and as the holders had connived at the transaction, and, besides, had been guilty of the grossest negligence in not bringing forward the bill at the proper time when due, when Mr. Lee could have operated relief against Mr. Donald's own estate, they are not now entitled to recover.

Pleaded by the Respondents.—Mr. Lee, the appellant's father, was clearly liable for the original bill, dated 20th March 1783, which was accepted in the usual manner by the managing partner of that company, under the company firm. This bill was accepted six months before it is alleged that Mr. Lee and his partners bad resolved to dissolve their copartnership, and two months before the contract expired. Mr. Lee, according to the established principles of law, must be liable, as a partner of the company, for that bill, unless he can show that this case does not fall under the general rule of law, owing to special circumstances. Here there was no such special circumstances. There was no fraud. As, therefore, no good objections could have been stated to the original bill granted in the name of the company, so neither does there lie any good objection to payment of the new or renewed bill. The mere renewal does not exempt from that liability. Being bound, therefore, as a partner, to pay the one, he was also liable for the other.

After hearing counsel, it was

Ordered and adjudged that the interlocutors complained of in the appeal be reversed, but without prejudice to the pursuers' bringing any action on, or in respect of the original bill for £1000, granted by Lee, Rodgers, and Company, as effectually as if they had amended

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their libel according to the terms of the first interlocutor complained of.

Counsel: For Appellant, W. Adam, John Clerk.
For Respondents, W. Grant, Ar. Cullen.

Note.—Unreported in the Court of Session.

1801