Scottish Court of Session Decisions

Subject_1 BILL OF EXCHANGE.
Subject_2 DIVISION IV.

Possessor's recourse against the Drawer and Indorser.
Subject_3 SECT. II.

Negotiation of Bill.

Ouchterlony
v.
Hunter

Date: 20 December 1743
Case No. No 141.

A person paying, under protest for honour of the drawer, is bound to give timeous notification.

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Several bills having been drawn in Scotland, by Hunter upon Charles Murray in London, payable to Peter Murdoch merchant in Glasgow, or order, which were paid by Ouchterlony supra protest for honour of the drawer: In the action at Ouchterlony's instance against Hunter the drawer for recourse, the question occurred, How far one who pays supra protest for honour of the drawer, is bound to give the same timeous notification, as the porteur is, of the dishonour of the bill?

On the one hand, part of the Court was of opinion, That as the porteur in case of a protest for not acceptance, or not payment, loses his recourse, if he omit by the first, or at farthest by the second post, after protest for not acceptance, or for not payment, to give notice to the drawer of the dishonour of the bill; so, where one pays supra protest for honour of the drawer, he in like manner loses his recourse where the like timeous intimation is not made. For as in general a negotiorum gestor is liable to the rules by which the negotium gestum is governed, so the drawer ought not to be put in a worse case by another's interposing, than he would have been, had it been left to the porteur to notify the dishonour of the bill; and the reason of the thing was said to be in both cases the same, that the drawer may be put on his guard to secure the person's effects on whom he drew the bill. And accordingly, the several authors who have treated of bills, such as Marius and Scarlet, from whose authority Forbes supports his opinion, (vide Forbes's Treatise on Bills, page 100 and 150, Edition 1718,) concur in it as an established point, that, in order to recourse, the same timeous notification is required in the one case as in the other.

On the other hand, others of the Lords were of opinion, That there was this difference between the porteur and one who pays supra protest for the honour of the drawer, that by the bill contract, the porteur undertakes diligence, and therefore is bound to make timeous notification to the drawer when the bill is dishonoured; whereas, he who pays supra protest, has undertaken no diligence, and therefore, if he lost his recourse, it must be on another foundation; and that can only be damage, which, if the drawer cannot qualify, the recourse is still competent.

This, however, was no farther carried, than that a notification would not be necessary according to the strict rules of the bill contract, admitting still that equity required a notification in a reasonable time. And, as it was thought this ought not to exceed ten days or a fortnight, it was therefore unanimously agreed, that the pursuer had lost his recourse as to such of the bills as had been paid, in March, and of which no notification had been made to the drawer sooner than the 20th of May: But as to one bill which had been paid on the 18th of May, and the payment notified on the 26th, on the vote stated, Whether it was competent to the defender, the drawer, to object thereto, without instructing damage through the want of more early notification? No less than six of the Lords were non liquet, four for finding the objection competent, four for finding it not competent, which last did, by the President's casting vote, prevail.

But, upon advising a petition and answers, though little was said farther than enlarging upon the former topics, it carried by a great majority, to “Find the objection competent, and the notification not sufficient,” although the defender, the drawer, could not instruct damage; which was, in other words, That he who pays supra protest, is bound to the same timeous notification as the porteur.

N. B. Before either of the above judgments, the Lords had remitted to two merchants in Edinburgh, noted dealers in bills, Coutts and Arbuthnot, to report their opinion upon the practice of merchants, who reported, That where a bill is taken up supra protest for honour of the drawer, in order to entitle the payer to recourse, notification ought to be made thereof to the drawer the post immediately after taking up the bill, or the next following post, and that such was the custom of merchants, & c.

At the same time, there was produced by Ouchterlony the opinions of several noted bankers in London, bearing, That by act of Parliament, the person who retires a bill supra protest for honour of the drawer, is allowed fourteen days to notify the same to the drawer, in order to entitle to recourse, and that such was the custom of merchants; and further, that the merchant, whose bills are taken up for honour, should always be liable, even where advice is wanted, unless it appear he has lost opportunities of securing himself by the want of advice. But these the Court had no regard to, as they had been mendicated by the pursuer, and not obtained by order as the others were, and as they proceeded upon a misapprehension of the act of Parliament therein referred to, which is that of the 9th and 10th of King William III. c. 17. which manifestly refers to inland bills within the kingdom of England, and allows fourteen days for sending the protest and giving notice to the drawer of the dishonour of the bill; which, as it was a law made in England before the Union, cannot govern bills between Scotland and England, or other foreign bills.

But notwithstanding the above judgments touching the notification necessary to be given, the cause came at last to be determined on a different medium, and to be given for Hunter the defender, who was found to be only a nominal drawer, whose faith was not followed by the porteur of the bills, the person by whom they were payable, nor by Ouchterlony, who accepted supra protest for honour.

Fol. Dic. 3. p. 89. Kilkerran, (Bills of Exchange.) No 9. p. 73.