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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Miller v Royal Bank [1835] CA 13_813 (21 May 1835) URL: http://www.bailii.org/scot/cases/ScotCS/1835/013SS0813.html Cite as: [1835] CA 13_813 |
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Page: 813↓
Subject_Bill of Exchange.—
A bill of exchange, which had been altered in its date, having been found, by an interlocutor acquiesced in, to be void against the original payees, whose names stood as indorsers on the bill, unless the holder could establish that it was an accommodation bill, or had been altered with their consent, before being issued to a third party—Circumstances which held not sufficient to infer this.
In August, 1831, the suspenders, M'Kay and Company, merchants in Glasgow, addressed to John Honeyman, also merchant there, the following missive, which was accepted and agreed to by him:—
“
Sir,—We hereby agree to consign to you all the grain for this quarter that may be purchased for us at Clare, on condition that you make advances on bills of lading which shall be handed to you as received. We empower you to insure the grain as shipments may be made, reserving for ourselves a risk on each cargo to the extent of £600. You are to charge four per cent commission, in the usual way; and, at the expiry of this contract, an allowance is to be made us on all the transactions from this date of one-half per cent: and, in the event of your not making bad debts by selling the grain alluded to, you are to allow one-half per cent more, making your clear profit three per cent, provided no bad debts are made. You are also to communicate to us any information that may appear useful, and to do what you can to promote
“T. M. M'KAY & Company.”
On the 6th February, 1832, Honeyman granted to M'Kay and Company his promissory-note for £500, payable two months after date. This note, on the same day upon which it was received by M'Kay and Company, was carried by them for discount, blank indorsed by them, to the branch of the Royal Bank of Scotland, at Glasgow, of which the charger, Robertson, is cashier. After lying in the bank till next day, discount was refused, and the note returned. It was then (as alleged by M'Kay and Company), redelivered to Honeyman on receiving payment of the amount, minus discount, but without having the blank indorsation by M'Kay and Company scored. It was subsequently again offered for discount to the bank, but by whom did not appear, and was discounted. In the mean time, however, an alteration had been made in the date from the 6th to the 14th February, with a marking on the corner of the note that the day of payment was changed from the 14th to the 17th of April; and there was, farther, this addition, signed by Honeyman, “Accepted from 14th February at two months—due 17th April.” Honeyman having become bankrupt, the bank charged M'Kay and Company for payment. They suspended, alleging that the alteration of the date had been effected without their knowledge or consent, and pleading, that this vitiated the note both at common law and under the stamp acts.
The Lord Ordinary pronounced the following interlocutor, adding the Subjoined note:
*—“The Lord Ordinary having considered the closed
_________________ Footnote _________________
* “Though this case involves important points of law, the Lord Ordinary does not think that there is much difficulty in the law applicable to it, looking to the English cases of Calvert v. Roberts, 3 Campbell, and Downes v. Richardson, 5 B. and A.; he thinks that the latter must be taken, as having conclusively fixed in the English Courts the points decided by it, viz. that, when an accommodation bill is still in the hands of any of the original parties to it, it cannot be considered as having been issued; and, therefore, may still be altered with consent of the parties, without infringing the stamp laws; and, as a mere attempt to discount such a bill, which ends in it being restored to the party, without any right of action under it being vested in the banker or other third party, cannot import an issuing in the material sense, there does not appear to be any thing in the specialty in Calvert's case, or in that which here occurs, if the facts were proved, to take either out of the principle so laid down, which the Lord Ordinary humbly thinks perfectly solid. On the other hand, it is clear, on the same and other authorities, that if the promissory note was granted for value, so that the suspenders had a vested right under it against Honeyman, it could not afterwise be altered, even with the consent of both, so as to make a good instrument under the stamp laws. Before enquiring, therefore, whether the suspenders consented to the change, the first and material question is, whether the note was an accommodation note or not. The Lord Ordinary has no doubt that, in this question, the onus probandi lies on the charger, according to all the most common and established rules, and he has thought it necessary so to decide, in order that the course which the cause is to take may at once be seen.
“In what manner the averment is to be proved, if the charger undertakes the burden, the Lord Ordinary will not anticipate—that being left open by the interlocutor. Yet he may observe, that a point of some nicety might possibly arise in extricating the facts. Supposing it were to appear, on reference to oath or otherwise, that the note, when given to the suspenders, was really given in payment of a debt, and so was then legally issued with the date of 6th February, the fact may be, if Honeyman afterwards paid the value, that, when it was returned to him, still with the original date, but bearing the indorsation of the suspenders, it was by such indorsation and delivery intentionally converted into a bill for his accommodation; and then the question might be, whether the subsequent alterations, if made with the consent of the suspenders, before issuing to the charger, should be effectual as made on the accommodation bill. Certainly the charger, apparently from a desire to avoid any appearance of undertaking the onus, has left the record in a state by no means satisfactory. The averment, affirmatively, that it was an accommodation bill, should have been in his own statement, and there should have been a plea in law especially built on it. This may be comprehended in his first plea in law, but it must be confessed that both the fact and the law on which the case appears to hinge, are rather in a loose state.
“The question of fact, whether this is the same note which was presented to the charger on the 6th February, on which much was said in the debate, does not appear to the Lord Ordinary to be of much importance; because he thinks that the mere attempts to discount would not alter the case. But certainly the way in which the charger represented the facts as having been ‘ascertained’ by him by enquiry on pages 9 and 10 of the printed answers to the bill, does not well agree with the cautious refusal now to admit the fact. If it were thought material, this might expose him to very serious expense where there can be no real doubt.”
This interlocutor was acquiesced in, and the bank appealed to the accounts between Honeyman and M'Kay and Company, as showing that, if these had been balanced and settled at the date of the note, the balance would have been in favour of Honeyman; and, consequently, as thus maintained, that the bill was an accommodation-bill; but it appeared, on the other hand, that there were several shipments of grain in course of being made from Ireland to Honeyman by M'Kay and Company, in terms of the agreement formerly quoted. The bank adduced no evidence of M'Kay and Company's consent to the alteration of the date, but contended, that it might legitimately be inferred from their names standing on it as indorsers.
_________________ Footnote _________________
* “By the terms of the agreement produced, Honeyman was expressly bound, so long as it should subsist, to grant bills successively to the suspenders, not only to the extent of the value of goods already forwarded to and received by him, but also occasionally to a defined amount of from £2000 to £3000 beyond that, against grain at Clare, as may be required. The charger says, that, at the date of the note in question, on the 6th February, 1832, if the account had been then balanced, the suspenders were debtors to Honeyman, at least, to the amount of £263; and he infers, that the note must be considered as an accommodation bill in this question. The Lord Ordinary cannot assent to the proposition. There was a current trade between the parties, regulated by a specific mercantile contract. The note was granted and delivered in implement of Honeyman's express engagement by that contract, and far within the limits of it. The suspenders had their farther cargoes of grain at Clare, and were in cursu of transmitting them. For it appears that, the account being closed, on the 30th March following, that is, before this note of 6th February, at two months, fell due, the consignments had been such, that, after the trustee on Honeyman's estate had rejected a considerable part of the claim of the suspenders, they were still creditors for £177. The Lord Ordinary thinks, that a note so granted was not an accommodation bill, but in itself an onerous document of debt, granted, in the first instance, in implement of a written contract, and which would, if not liquidated, have been held, at least, as a clear document of debt between these parties. It was asked in the debate, whether it could have been put in suit against Honeyman by the suspenders? It could not, of course, have been sued on before it was due. But when it did become due, if it had remained in the hands of the suspenders, most certainly he would have been bound to pay it if he had remained solvent. As the case stands, he was debtor on the account before that time, after being credited with the full amount of this note. But even though it had been otherwise, he could not have refused to pay without a direct breach of his engagement. Accordingly, he plainly acknowledged his obligation to make the advance, in so far as, when the suspenders failed in getting the note discounted, he discounted it himself, or paid the value, minus the discount.
“The Lord Ordinary cannot consider a promissory note, made and delivered in implement of such an agreement, and afterwards paid up by advance by the obligant, as a bill which had not been issued when it was first put into the hands of the suspenders, and this is the point which was, with difficulty, held to make the distinction in the case of Downes, from the principle laid down in that of Calvert.
“But the Lord Ordinary also thicks, that, even though the note could, in any sense, be considered as an accommodation bill, the charger has not shown that the suspenders consented to the alteration of the date. There is no evidence of this as a fact at all. The charger says he was entitled to presume it from the indorsation. The Lord Ordinary sees no ground for this. Though the suspenders should be taken as having, by leaving their indorsement uncancelled, consented to Honeyman using the note as it was originally framed, how will that prove that they consented to its being vitiated, or being made of a different date? It is no proof, and affords no presumption of such a fact.
“The charger tried to infer a consent in another way, by referring to the statement of the suspenders (in their 5th reason), that Honeyman paid the money to them, minus the discount, and that the discount allowed was £3, 9s., and then alleging that the discount was the precise sum for a bill for £500, at two months, at four per cent; but whoever made this reckoning is in a mistake. £3, 9s. is not the discount on £500 for two months, at four per cent. But here the calculation was more intricate, for the account shows that £260 were paid on the 8th February, and £236, 11s., not till the 28th February. The discount must be reckoned with reference to these specialties; and, when that is done, the Lord Ordinary believes that, at five per cent, the £3, 9s. will be found to agree very nearly with the supposition of the original date remaining; but certainly that sum will not correspond with a discount from the date of the 14th, at any rate of interest. The argument, however, is worth nothing, unless the reckoning were perfectly precise, as stated in the debate.”
On resuming consideration of the cause, the Lord Ordinary pronounced this interlocutor, adding the subjoined note:
*—“Finds that the
The Court adhered.
Solicitors: Campbell and M'Dowall, S.S.C.— Dundas and Wilson, C.S.—Agents.
