Scottish Court of Session Decisions

Subject_1 PART I.

BILL OF EXCHANGE.

Fergusson and Company
v.
Belsh

Date: 17 June 1803
Case No. No. 13.

Protest is necessary, though the accepter has become bankrupt before the term of payment.

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John Belsh, cashier of the Merchant Banking Company at Stirling, remited to R. and G. Fergusson and Company, merchants in Carlisle, a bill for £12. 12s. drawn upon and accepted by John Risk in London. When the bill became due on 5th June, Risk had committed an act of bankruptcy: He was unable to pay it; but no protest was taken upon the bill.

The dishonour was notified to Belsh in a letter of the 15th, who, in answer, (18th June 1801), desired the protest to be sent to him, and added, “the moment that the protest comes to me, I shall send you a draught on London at sight.” A protest was acordingly taken on the 29th, and sent; but Belsh declined payment, on the ground that his recourse was lost against the prior indorser, suspended a charge for payment, and.

Pleaded: When payment of a bill on becoming due is refused, a protest must be taken immediately, in order to preserve recourse against all concerned in its negotiation. This is a rule without a single exception; Ersk. B. 3. T. 2. § 33.; and no protest taken on the day subsequent to the last day of grace will be sufficient for this purpose; Crookshanks against Mitchell, 17th and 29th June 1748, No. 145. p. 1576. and it makes no difference that the accepter was bankrupt at the time; Langly against Hogg, 17th June 1748, No. 144. p. 1574. which rather strengthens the claim against the holder of the bill to negotiate strictly, that the proper recourse may be preserved against the indorsers.

The promise of payment was only on the idea that the bill had been duly negotiated. The letter alludes to a protest which was supposed then to be in existence, and not to one taken afterwards, which could be of no use whatever.

Answered: Protest and notification of dishonour are required by law; because it may perhaps be in the power of the drawer to take such steps as may enable him to recover his payment from the accepter; but if it is perfectly obvious, that payment cannot be recovered from the accepter, no principle requires the same diligence. The claim upon Risk's bankrupt estate would have been made no better by the production of a regular protest than it is at this moment. No damage whatever has arisen from this neglect.

Besides, a new obligation to pay was incurred by the promise to remit the money when the protest should arrive; after which there could be no longer any pretence for withholding repayment.

The Lord Ordinary (24th November 1802) “in respect the bill charged on was not duly negotiated, sustains the reasons of suspension, suspends the letters simpliciter, and decerns; finds the chargers liable to the suspender in expenses.”

To which his Lordship adhered, on advising a representation with answers, (20th January 1803), “upon the ground assumed in the interlocutor represented against; and in respect the bill charged upon being drawn in Scotland, and payable in England, is a foreign bill, requiring a regular protest on non-acceptance or non-payment, as well as notification of the dishonour within three posts at farthest, while the English statutes referred to by the representers appear to relate exclusively to inland bills, and that the promise of payment made to the representers on receipt of the protest, must be understood to have implied a timely protest.”

To these interlocutors the Court adhered, (17th June 1803) upon advising a petition with answers.

Though it appears that in England, by the common law, inland bills, that is, bills drawn and accepted within England, did not require strict negotiation; and that it was only by 9th and 10th William III. C. 17. that protests were introduced on such bills; and that, consequently, the only consequence yet arising from the failure to negotiate strictly, was, that the holder has no recourse for the interest and for damages, a rule extended to promissory notes, by 3d and 4th Anne, C. 9; yet with us no distinction relative to protesting has ever been made between foreign and inland bills. In both, the same rules hold; making it in all cases essential to protest upon the last day of grace in case of non-payment.

Lord Ordinary, Hermand. For Suspender, Montgomery. Agent, Coll Macdonald, W. S. Alt. W. Erskine. Agent, A. Young, W. S. Fac. Coll. No. 111. p. 244.