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.

Thistle Bank in Glasgow,
v.
Hugh M'Kay, of Bowmore in Ilay

Date: 20 December 1774
Case No. No 161.

The drawer of an accepted bill, transmitting it, without indorsation, to his correspondent, (who indorsed, and, on getting it discounted, credited the drawer with the sum in his accounts with him,) found liable in recount to the holders, upon the failure of acceptor and indorser.

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M'Kay, a considerable drover or dealer in cattle, who had, for a number of years, employed James Campbell, Sadler in Glasgow, as his correspondent and banker, drew a bill for L. 50 Sterling upon the now deceased John Gillies of Douchra, dated 25th May, and-payable 1st December 1770, at the shop of the said James Campbell; which Gillies accepted, and was, within a few days after-its date, transmitted by M'Kay, but without an indorsation, to Campbell his correspondent in Glasgow, who having applied to the Thistle Bank to have this bill discounted, they did So, and paid him the value in ready money, on his indorsing it to them.

Gillies the acceptor having died, leaving his affairs in disorder, and Campbell's affairs having also gone into disorder, the Thistle Bank, in harvest 1772, brought a process before this Court against the representatives of Gillies, as also against M'Kay and Campbell, all conjunctly and Severally, for payment of the contents of Said bill, which had been regularly protested, by the holders, in which a decree was allowed to pass, which was afterwards extracted, and a charge of horning given thereupon.

M'Kay obtained a suspension of the charge; and, at first, he maintained, that distrusting the acceptor's circumstances, he never meant to indorse this bill to Mr Campbell, or to be answerable for the value of it; but that he put it into Campbell's hands, merely in trust or exchange, in order that he might endeavour to get payment of it from the debtor. Hence he argued, that, if the Thistle-Bank thought fit to discount the bill, on Mr Campbell's indorsing it to them, they could only claim their recourse from him, but not from the defender. In the course of the debate, the defender gave different accounts of the terms on which he understood that Campbell was to hold, and agreed to take this bill without an indorsation, insinuating, that it was because Campbell was also in bad circumstances, and in the defender's debt; and that the pursuers, again, were glad thus to take it from Campbell, in payment, pro tanto, of a debt which he owed them. But, admitting that the circumstances occurring in this case were equivalent to his having granted to Campbell an assignation to this bill, he argued that this cannot supply the want of an indorsation; for that, if the defender had only assigned this bill to Campbell, the pursuers, deriving right to the bill from him, must have taken it Subject to the counter claims which the defender had against Mr Campbell; but that nothing but an actual indorsation can entitle the holder to recourse, without being Subject to Such counter claims.

An investigation into facts having been made, and writings recovered, by authority of the Lord Ordinary, particularly a doqueted account between the defender and Mr Campbell, of date 26th October 1772, SubSequent to the execution of the present Summons, the pursuers insisted, That the circumstances of the present case are so clearly demonstative of the defender's intention to be bound, as leave not the least room for a doubt. It is in evidence, that Mr Camp, bell, the defender's ordinary correspondent and factor, was in the daily practice of discounting bills transmitted to him by the defender; that the bill in question was transmitted within a few days after its date, and fix months before it became payable. In these circumstances, when Mr Campbell brought this bill to the pursuers to be discounted, and assured them that the want of an indorsation by the defender was a mere overfight, the pursuers had all the reason in the world to believe him; but when, further, the defender is seen ackowledging, that he did put this into Mr Campbell's hands, in order that he might convert it into cash; when, at an after clearing, of accounts with Mr Campbell, this bill is stated in the doqueted account of date 1st June 1772, though not payable till 1st December; so that the defender takes credit for the sum of this bill, as so much cash paid to Mr Campbell at the time of its being transmitted; when, recently before this clearance, the defender is apprised that cash bad been got for this bill, by discounting it with the pursuers, and that they had intented process against him for recourse; and when he, upon this, takes credit for this bill from Mr Campbell, and allows a decree for recourse to go against himself at the instance of the pursuers; it is impossible, from all these circumstances, to draw any conclusion, other than that the defender was conscious that his conduct:, with respect to this bill, was in all respects equivalent to an actual indorsation and that the pursuers had a just claim against him for recourse. At the same time, the pursuers must observe, that the distinction which the defender would here establish, between the effect of an assignation and an indorsation of a bill, is by no means well founded in law. They have precisely; the same effect; (vide Erskine, p. 438. § 31.; No 102. p. 1515.) wherefore, the admision made by the defender, of the circumstances arising in this case being tantamount to an assignation of this bill by him to Mr Campbell, is all that the pursuers have occasion to contend for, in order to establish their recourse against the defender. And, indeed, the defender's error in this particular proceeds from a misapprehension of the principles on which questions of this kind fall to be decided. Vide Forbes on Bills of Exchange, p, 23. and 24. Cuningham on Bills of Exchange, p. 26.—105.

The Court adhered to the Lord Ordinary's interlocutor, which. ‘repelled the reasons of suspension, and sound the letters, orderly proceeded,’

Act. W. Baillie. Alt. J. Boswell. Clerk, Tait. Fol. Dic. v. 3. p. 90. Fac. Col. No 145. p. 378.