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(1819) 1 Bligh 315
REPORTS OF CASES HEARD IN THE HOUSE OF LORDS, UPON APPEALS OR WRITS OF ERROR, And decided during the Session, 1819. 59 Geo. III.
SCOTLAND.
APPEAL FROM THE COURT OF SESSION (FIRST DIVISION).
No. 9
A Law agent continuing to act for his client, held responsible for a loss caused by his neglect, although twenty-five years had elapsed since the transaction; notwithstanding a correspondence respecting the loss, in which the client acquiesced without remonstrance; and after a settlement of accounts with the Representatives of the client, and a discharge given by them before they had discovered the facts.
Macdonald, of Finlarig, the father of the Respondent, Mrs. Lillie, employed in the management of his affairs William Macdonald, of St. Martin's, father of the Appellant, and writer to the signet.
Circumstances of the case.
Towards the end of the year 1787, Finlarig wrote to W. Macdonald, expressing his wish that some of his money then lying at a bankers should be laid out on security at five per cent. to his (W. Macdonald's) satisfaction. In April 1788, Macdonald was applied to by another of his clients, Colonel Charles Campbell, of Barbreck, by letter, in the following words:
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“ I have been so harassed and plagued with applications for and from my son Charles, that I have at last agreed to his purchasing Captain Campbell Ederline's company, which, with my former advances this season raising men, and to enable him to prepare for the voyage, will at least cost 1,600 l. So unexpected a demand I did not expect, and consequently will oblige me to borrow some money. I do not like the idea of giving any person security if it can be avoided; but I have no objection to lodge a bond of Captain Hector M'Niel's to me for 1000 l. in the hands of the person who will let me have that sum, as an additional security with my own bond.”
The letter then noticed some other difficulties in which Colonel Campbell was involved from advances he had been obliged to make, observing that, on the whole, these were “ dreadful,” and he concluded thus:—
“I beseech you to get this 1000 l. business settled without loss of time, and let me hear from you in course of post.”
Upon this application, Macdonald accommodated his client, Colonel Campbell, with 1000 l. of his other client Finlarig's money, taking as a principal security for that sum the bond of Colonel Campbell, with an assignment to that of Captain Hector M'Niel, as a collateral security, both conceived in favour of Finlarig as the lender; and on the 19th of May, 1788, Macdonald wrote thus to Finlarig:—
“I have lent another 1000 l. of your money at this time, on very good
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security, to Colonel Charles Campbell of Barbreck.”
The security intended by this expression, appears from an entry in Macdonald's books to Finlarig's account, of which a copy by way of account current was sent to Finlarig in December, 1788, having this article:—
“To Cash lent Colonel Charles Campbell of Barbreck, on your account, on bond and assignation to Captain Hector M'Neil of Ugadale's bond for 1000 l.”
It appeared afterwards that Macdonald, the agent of Finlarig, did not complete the right of his principal to Captain M'Niel's bond, by giving intimation of the assignment to M'Niel, the obligor and debtor, according to the law and practice of Scotland.
In May, 1789, Colonel Campbell and Captain Hector M'Niel granted their joint bonds to three different persons for 1000 l. sterling each; and of the same date, Colonel Campbell granted a bond of relief or indemnity to Captain M'Niel, on the recital of these three bonds, stating that the money was received by Colonel Campbell, and wholly applied to his use; and that Captain M'Niel had become bound in the said securities at his, Colonel Campbell's desire, and for his account, and therefore engaging to indemnify Captain M'Niel, or to pay the money to him, that he might relieve himself of the said engagement. All these transactions were conducted by Macdonald.
On the 2d of January, 1792, Macdonald, in a letter addressed to Colonel Campbell,
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In April, 1792, Colonel Campbell died in a state of insolvency, and his estates were brought to a judicial sale. Captain M'Niel being obliged to pay all the three bonds above mentioned, received from the creditors therein assignments qua cautioner, or surety, of their respective debts, for the purpose of enabling him to operate his relief against the estate of Colonel Campbell. On these and the bond of indemnity he was ranked as a creditor, and took a dividend with the other creditors when the estates of Colonel Campbell were sold.
On the same occasion Macdonald, who continued to enjoy the confidence of Finlarig, and the management of his affairs, got him ranked as a creditor on the estate of Colonel Campbell,
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Pending the action for a sale of Colonel Campbell's estate, and the division of the purchase money, Macdonald advised Finlarig, from time to time, of what was going forward, representing the Colonel's insolvency as a matter of surprise to himself and every one else, but taking no notice of the collateral security by the assignment of M'Niel's bond.
Dec. 13, 1792.
Colonel Campbell's death and insolvency had been announced to Finlarig by Macdonald in the following letter:—
“The hurry and confusion I have been thrown in by the death of my book-keeper and principal clerk, the one after the other within six months, has engrossed my attention so much, that I am not able to answer letters regularly of late, and prevented me writing you earlier of the death of Colonel Charles Campbell, to whom 1000 l. of your money had been lent several years ago, when he was in as good credit as any man, possessed of a land estate better than 2000 l. sterling of yearly rent; but since his death, it turns out that he was greatly in debt, owing to an expensive and extravagant family, and various projects of improvements; for he was a man of no expensive turn himself. However, after a full examination into matters, it is the general opinion, when the estate is sold, there will be no short coming in payment of the creditors, though the interest will not be drawn regularly, at least while the widow lives. This is so far uncomfortable; but as I lent your money on all occasions as I would my own,
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misfortune cannot be avoided at times, though it seldom happens; and even in this instance, I don't look on it by any means as desperate, now that matters are pretty well understood.”
Finlarig wrote an answer to this letter in the following words; *
Jan. 6, 1793.
“Dear Sir, I have been favoured with yours in course of post. I observe what you say concerning Colonel Campbell; it is not very agreeable, but it might be worse.”
April 25, 1800.
Of this date, Mr. Macdonald transmitted to Finlarig a copy of his account, accompanied with a letter, in which he says:—
I have judged it proper to send a duplicate, as then made up, for your examination, having got a frank from Lord Perth for that purpose, and shall be glad to hear from you when convenient, that you find the account right. You'll observe; that you have just now 2100 l. lent on the two bonds by the Perthshire trustees; of whom I am one myself, along with Lord Perth, and several others, so that no accident can befal any part of it; and this, besides the debt due to you, as formerly mentioned, by the estate of the late Colonel Charles Campbell, the recovery of which, or some part of it, must be a distant period before dividends are made to the creditors, till the widow dies.”
May 11, 1802.
In answer to this letter, Finlarig wrote in the following terms:—
Dear Sir, I was duly favoured with yours of the 25th ultimo,
_________________ Footnote _________________
* It appeared from all the letters of Finlarig that he was a very illiterate man.
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April 8, 1802.
In the month of April, 1802, Mr. Macdonald transmitted to Finlarig an affidavit to be made by him, relative to the debt due from the estate of Colonel Campbell, in order to be produced in the process of ranking, sale, and division abovementioned. In his letter inclosing this paper, Mr. Macdonald says—“ Dear Sir, I send you the inclosed affidavit to be made before a justice of the peace, and I fancy you need not go farther
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April 15, 1802.
Finlarig returned the affidavit, executed, in a letter to Mr. Macdonald, of the following tenor:—
“Finlarig, 15th April, 1802. Dear Sir, I received yours, inclosing the affidavit, and I hope that matters is done to your mind. Your cousin Tullochgriban is just such another justice as myself; although appointed for two counties, we never qualified either of us. I have not been well since I was at Elgin, with fever and ague, and have not been out of the house for eighteen days; therefore was obliged to get the justice of the peace to my own house, so that you may date it at Finlarig, 14th instant, in the county of Moray or Elgin, and the justice is for the same county, and Inverness; take your choice. I am afraid I must call on you for money at Whitsunday and Martinmas both. Those years have ruined us. This is a terrible climate; we could not get a yoke a plough for three days past, with frost and snow; it will kill
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all our lambs; it bids badly for a crop or a good harvest, as they say that the harvest will be like the spring. The justice of the peace is James Grant, Ballintom, in case you should want his designation. I hope all is according to your directions; and with best respects to yourself and family, I remain,” &c.
April 1, 1803.
In the month of April, 1803, Mr. Macdonald sent Finlarig for execution, a discharge for a dividend from Colonel Campbell's estate; in the letter accompanying which, Mr. Macdonald says—
“I now send you a discharge for a dividend from Colonel Charles Campbell's estate, upon that unlucky debt he owed to you upon bond; and there will be another dividend of less amount very soon, but no more till the death of his widow, when the sum she liferents will also be divided among the creditors, &c. This same sum, small as it is, I had once little hopes of recovering; the Colonel's failure from affluent circumstances being to so great an amount as astonished every body.”
April 6,1803.
In his letter returning this discharge, Finlarig says:—
“I find by the dividend, that Campbell must have died much involved; and from seeing the bond being landed security, I see it hardly possible to guard against a man that is in good credit, when he is inclined to be a villain,” &c.
Nov. 18, 1803.
In the month of November, 1803, Mr. Macdonald transmitted to Finlarig a discharge for another dividend inclosed in a letter, of which the following is an extract:
“I am favoured with yours of the 12th current, and was just
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preparing to write you with the inclosed papers for your signing, when your letter came to hand, This second dividend of Colonel Campbell's estate, (and God knows when the next will take place,) will, small as it is, enable me, with 50 l. of interest I have to draw in January next for you, to pay the 100 l. you are to draw for, which do when you please. I have lent this term 400 l. for you, made up of interest with the former dividend from Colonel Campbell, as I manage for you as I do for myself; and therefore don't draw for more than this 100 l. you mention, till next Martinmas, if you can avoid it, because I'll have no money of yours till then; but for all that, if you are in need, I'll honour your bills.”
Nov. 22, 1803.
Finlarig returned the discharge, executed, in a letter to Mr. Macdonald, in which he says,—
“I am favoured with yours, inclosing the instrument and discharge, which I have executed, as near as I can, according to your instructions. The witnesses are both my servants, and lives in my family at Finlarig, and signed this day the witnesses and myself. I will draw no more than the 100l. from you, I hope, for a year. I am always sensible of your good offices towards me, since I had the honour of your acquaintance, and I am always sensible that you do everything for my interest,” &c.
The dividends received from Campbell's estates, and paid over to Finlarig, amounted to 304 l. 1 s. 3 d. He died in the year 1806, leaving an only child, the Respondent, Mrs. Lillie.
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July 20,1811.
In the year 1807, Mr. Macdonald, the Appellant's father, having rendered a state of his accounts, and in the year 1811, a farther and final account, to the representatives of Finlarig, Mrs. Lillie, in a letter of July 20th, 1811, wrote to Mr. Macdonald in the following terms :—
“My uncle, Mr. Grant, at Muirtown, was favoured with your letter of the 11th instant, inclosing an account current between you and my curators, commencing the credit side in your favour on 20th March, 1807, and ending on the 11th July current; commencing the debit side against you 26th February, 1807, and ended on the said 11th July current; on which there arises a balance due by you to me and my late curators, of 51 l. 15 s. 9 ¼ d. This account has been perused by myself Mr. Lilli and Mr. Grant for himself, and acting as factor for my other curators, and is, as well as all other accounts rendered by you of your intromissions with my father's found to be perfectly accurate and satisfactory to all concerned; not only so, but the liberal and friendly manner in which you have conducted this business in general, by departing from claims so competent to yourself merits, as I trust it will have, my most ample acknowledgements and gratitude upon all future occasions. I have therefore, this day, drawn upon you, with the consent of my husband, for the above balance of 51 l. 15 s. 9¼ d.
After the death of Finlarig, and after all the correspondence and transactions before stated (see p. 17), the account current, which Macdonald had transmitted to Finlarig in 1788, being found among his papers; the entry in it respecting Captain M'Niel's bond suggested an inquiry why, instead of resorting to the insolvent estate of Colonel Campbell, and taking the small dividends which it afforded, Macdonald had not recovered the money from M'Niel, a person in affluent circumstances.
Upon this subject, a correspondence * took place between Macdonald and the friends of Mrs. Lillie, in consequence of which a demand was made on Captain M'Niel; but he founded on the want of intimation of the assignment, as entitling him to plead compensation (a set off) on the three bonds for borrowed money granted in 1789, which he as surety had been obliged to discharge, and Colonel Campbell's bond of indemnity; and he pleaded also compensation on another debt, alleged to have been due to him from Campbell, on a transaction previous to the date of the bond assigned.
As to the latter ground of set-off, it appeared that by a personal bond dated in Dec. 1776, Colonel Campbell of Barbreck, and Captain John M'Niel the younger of Ugadale, upon a recital that they had borrowed and received from Niel M'Niel, Esq. of Ugadale, the sum of 1100
l. sterling,
_________________ Footnote _________________ * The only letter in this correspondence which appears to be material, is mentioned by the Chancellor, in his observations, post, 382, and an extract from it is printed at the end of this case
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Under these circumstances, in the year 1813, the Respondents brought their action in the Court of Session against Macdonald for payment of the 1000 l. and interest, so far as payment had not been recovered from the estate of Colonel Campbell; founding on his gross and culpable negligence in not having intimated the assignment of Captain M'Niel's bond; and in order (as it was said) to give Mr. Macdonald an opportunity of proving, if he could, that there had been intimation, the Respondents made Captain M'Niel a party to the action. Macdonald, one of the defenders in this action, died shortly after its commencement; whereupon the Appellant, his son, became a party as his representative.
By an interlocutor pronounced on the 25th of June, 1814, the Lord Ordinary, before whom
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The Appellant having given in a representation against this interlocutor, to which answers were made for the Respondents, the Lord Ordinary, on the 17th January, 1815, pronounced the following interlocutor:
“The Lord Ordinary having considered this representation, with the answers thereto, and whole process of consent of the pursuer, restricts the principal sum decerned for to the sum libelled of 1000 l. sterling, deducting therefrom the sum of 248 l. 17 s. 8 d. sterling paid to account, on the 13th of April, 1808, and 55 l. 4 s. 0 ½ d. sterling paid to account on the 30th of November, 1803; and further ordains the pursuers on receiving payment of the sums decerned for to assign over to the defender their claim to be ranked on the estate of Barbreck, that he may operate his relief, but quoad ultra refuses the desire of the representation, and adheres to the interlocutor represented against.”
A representation against this last interlocutor was refused by the Lord Ordinary without an answer.
Dec. 15, 1815. 1st interlocutor of the Lords of Session 2d div. appealed from.
The Appellant then presented his petition to the Court in the Second Division, reclaiming against the said interlocutor of the Lord, Ordinary, to which answers being made for the Respondents, the following interlocutor was pronounced:
“The Lords having advised this petition with the answers, refuse the petition, and adhere to the
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interlocutor complained of in so far as respects the principal sum, and two partial payments therein specified, but consent to find interest only due from the 15th day of May, 179l, and to that extent alter the interlocutor complained of and decern; find the defender liable in expences; allow an account thereof to be given in, and remit to the auditor to tax the same and report.”
Dec. 13, 1816. 2d interlocutor of the Lords of Session appealed from.
To this interlocutor the Lords adhered, by refusing a second petition for the Appellant on answers made;
And finally, they awarded costs to the Respondents, to the amount of 140 l. 19 S. 2 d
From these several interlocutors of the Lord Ordinary, and Lords of Session, the Appellant appealed to the House of Lords.
For the Appellant— the Solicitor * and Mr. J. A. Murray. For the Respondents— Mr. C. Warren and Mr. W. Adam.
Argument. May 21, 1819.
On the part of the Appellants, it was argued that the agency was gratuitous—that the neglect was not gross—that intimation ought to be presumed—that it would have been useless if made—as M'Niel might have pleaded compensation upon the old bond—that the client's claim was barred by acquiescence and prescription; and that of his representatives by discharge—and both by length of time.
_________________ Footnote _________________
* Sir R. Gifford.
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The gratuitous agency was denied on the part of the Respondents, and argued to be immaterial; and it was insisted that the responsibility continued, notwithstanding time and apparent acquiescence; for the client was ignorant both of the fact and the law; and the agent, continuing to act for the client and his family, kept them uninformed, contrary to his duty. The fact was discovered by the representatives, after they had given the discharge. If M'Niel had any counterclaim, he would not have paid interest.
On behalf of the Appellant the following authorities were cited:—Ersk. 3. 7. 29. on the extinction of obligations by taciturnity; Ersk. 4. 4. 109. As to the vicennial prescription, which operates even in cases of murder, Macgregor's case, M'Laurin's Crim. Cases. * As to bar by presumption, Wemyss v. Clark, 28th June, 1749, Dict. of Decis. 11640; Case of Fullarton, 27th July, 1757. As to length of time, Kames, tit. Grounds and Warrants, p. 353; Blackwood v. Purvis, Dict. of Decis. 5167; Provost of Stirling v. Jardine, Dict. 5191; Maxwell v. Maxwell, Dict. 5174; Maxwell's Creditors, Dict. 5181; Wilson v. Sellers, Fac. Coll. 6th July, 1757, Dict. 5184. As to prescription, under stat. 1494, c. 57. and 1617, c. 13. Ersk. 3. 7. 19. As to implied discharge and renunciation, Kames, pp. 430—440. Hogg v. Niven,
_________________ Footnote _________________
* pp. 595. 773. Callum Macgregor, Aug. 9. 1773, was put upon his trial for a murder committed twenty-five years before the indictment. It did not appear that any sentence of fugitation had passed against the prisoner, and the Court unanimously sustained the defence of prescription.
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Dict. 6533. As to settlement of accounts, Graham v. Rochead, Id. 6534. *
For the Respondents the following cases were cited, of mandatories and agents held liable for neglect:— Garden v. Lindsay, Dict. 3519; Case of Susanna Rae, Id. 13963 ; Goldie v. Macdonald, Id. 13965; Lizars v. Dickie, Id. 3532; Masson Thorn, Id. 3535 and 13967.
If a debtor by obligation, having a counter-claim of compensation against his creditor, knows of a transaction of loan, in which his creditor assigns the obligation as a collateral security to the lender—and suppresses his knowledge, leaving the parties to complete the transaction of loan and security—he cannot afterwards claim compensation so as to defeat the collateral security.
The
_________________ Footnote _________________
* And see generally in the Dict. of Decis. the titles Prescription, Presumption from Lapse of Time, Grounds and Warrants, and Implied Discharge.
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did it happen that M'Donald, being the law agent of both, took it as a security, knowing a fact which would make it ineffectual—if there was no prior debt, then there was nothing to prevent the claim against M'Niel. Suppose M'Niel had a prior claim, unknown to both the writer and the lender; if he suppressed that fact, knowing of the transaction of loan and security, he could not claim compensation. It is unaccountable that the security was not made complete by intimation. For when the writer recommended the security, he had received a letter from Campbell, which showed the hazard of lending the money on his personal responsibility.
But if the bond had been duly assigned, and duly intimated, would there have been any necessity to wait for the winding up of Campbell's affairs, before suing upon the bond of M'Niel?
In the oath of verity, in the process of ranking, M'Donald recites the assignment, “This deponent,” &c. Appendix to paper, 6th April, pp. 18, and 19. After this he cannot say he considered the security as good for nothing.
The printed cases have not stated letters written in 1813, which are material. In one of those, * M'Donald the writer states the-bond only to have been deposited. From this representation, it appears improbable that there could have been intimation of assignation. Paper, 12th June, 1815, p. 11.
_________________ Footnote _________________
* See extracts from this letter at the end of the case.
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The
The proceedings in this case were instituted in 1814, and as they refer to transactions commencing in 1788, the case deserves great attention. It is a claim made against an agent, for compensation on account of negligence in providing for the interest of his client. It is admitted that Mr. M'Donald was highly respectable in his profession. I should be unwilling to act on any principle adverse to the doctrines of presumption or prescription. If this is to be represented as a cause of action arising in 1788, and there was nothing to keep it alive, it would be too dangerous to inquire into it. But, unless I mistake the nature of the case, there certainly was negligence; and the ground of the complaint is not taken away by lapse of time, or the nature of the transactions which have since taken place.
The word negligence, I do not use in a sense reproachful to the memory of Mr. M'Donald the writer.
In 1788, M'Donald the father (Finlarig) employed M'Donald the writer to place out his money on good securities. Colonel Campbell was a man in suspicious circumstances, as we may understand from the advice against real securities, on account of the evidence which it would furnish upon record. The fact that he wanted 1000 l. is a proof that he was not in easy circumstances. Colonel
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“I had a letter lately from my namesake, who lent you 1000 l. some years ago, upon your own bond simply, containing an assignation to a bond of Captain Hector's, for the like sum, and he mentions his intention of sending me the. bond, as he wants the money,” &c.
There has been much argument as to the question in whose possession the bonds were; but it is not material. It is fully ascertained that, at a subsequent period, the bonds must have been in the possession of Macdonald the writer. At this time, Macdonald the writer was negociating securities from Colonel Campbell; and then, not confiding in the circumstances of Campbell, occurs
_________________ Footnote _________________
* Because heritable bonds charge the land specifically, and, when perfected by seisin, operate as a direct conveyance by mortgage, in England.
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the expression as to heritable securities. It is not easy to understand the expression, as to securities of record, in any but one way. The accounts sent in (the first, the second, and the third, being further parts of the same account,) may be said to have been in the possession of Macdonald the father, from 2d April, 1792, up to the year 1811. There is, in these accounts, an item thus: “By three years interest from bond and assignation” This is said to be an intimation to the father; but, from the complexion of the accounts, and the other transactions, it is just to say that Macdonald the writer was, in the amplest sense, the man of business of Macdonald the father, and bound to advise and act for him. Colonel Campbell died in 1792, in a state of embarrassment. Immediately following that event, there is a letter from Macdonald the writer, intimating that his affairs might be retrieved.
Macdonald the writer still continued to be the man of business for the father, and afterwards for the representatives. If the bond of M'Niel had been intimated, the insolvency of Campbell would not have prevented their putting it in suit. But no demand was made upon it; and in the correspondence it is remarkable, that in all the letters between Macdonald the father, and Macdonald the writer, no mention is made relative to the bond supposed to be assigned, or the intimation of it, or the reason why it was not made effectual, if completed. To meet this observation, it is said that if there be taciturnity, courts do not inquire; and, undoubtedly, though nothing is more
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Professional men must be strictly held to such accuracy as to give security to their employers.
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Lapse of time, under circumstances, may be an excuse; but the former principle preponderates here: and as the safety of clients ought not to be discussed at the expense of their representatives, this case ought to be affirmed with 80 l. costs.
_________________ Footnote _________________
* Referred to by the Lord Chancellor, ante, p. 332. It is a letter from M'Donald the writer to Mr. Lillie, dated March 26, 1813. It contains the following passages:
“I can now, however, tell you that Captain M'Niel was not bound as cautioner along with Colonel Charles Campbell; for, at that time, the Colonel was in great credit, and in possession
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no necessity to wait for winding up the affairs of Campbell's estate. These transactions could arise from this circumstance only, that there had been no intimation. The negligence is clear. As to length of time, the letter of 1813 holds out hope as against M'Niel. There was no negligence in Finlarig, or his representatives. He was a person of ignorance, trusting to his legal adviser, and the representatives acted as soon as they had information.
Judgment affirmed.
_________________ Footnote _________________
of a large estate; but the Colonel gave him a bond of the Captain's for 1000 l. by way of deposit, as additional security, with his own bond for the 1000 l. of Finlarig's money lent him; and upon the Colonel's death, it was found that he was so much involved in transactions with Captain M'Niel that it is difficult to say what may be recovered from Captain M'Neil, or how far he may be liable; until the process of ranking and division, among the Colonel's creditors, is deliberately examined into, which must take time, as there is no access, at present, to that part of the process, which is most material to be looked into, it being borrowed up by one of the agents for creditors, who has either mislaid it, or lent it to some other of the agents, and requires time to be got at. At any rate, there are further dividends to be made, of which Mrs. Lillie draws her share; which is all I can say on the subject at present.”