Scottish Court of Session Decisions

Todd & M'Laren, drapers, Lanark, suspended payment in November 1876. Their largest creditors were Clapperton, Paton, & Company, Glasgow, to whom they were indebted in the slim of £797, 13s. 3d. Mr Tolmie, accountant in Glasgow, prepared for the creditors a state of affairs. Thereafter the creditors accepted an offer of composition of 15s. per £1 on their respective debts, to be paid by James S. M'Laren, the other partner J. S. Todd being allowed to retire from the concern. The composition was to be paid by four equal instalments at three, six, nine, and twelve months from 15th December 1876. For the last of these instalments John M'Laren, Donald M'Laren, and Adam Anderson, the defender in this action, agreed to become cautioners, the liability of Anderson being restricted to £135. The cautionary obligation was in these terms—“We, John M'Laren, farmer, Ballindalloch, Comrie, Perthshire, Donald M'Laren, cattle dealer, Colinsburgh, Fife, and Adam Anderson, travelling draper, 47 Castlegate, Lanark, hereby agree to become jointly and severally sureties for payment of the last of four instalments of a composition of fifteen shillings per pound offered by James S. M'Laren on the debts due by his firm of Todd & M'Laren, drapers, Lanark, said instalments being payable at three, six, nine, and twelve months from 15th December 1876; moneys to be lodged by him fortnightly, for behoof of the creditors, to meet the several instalments as they fall due; Mr John S. Todd, his partner, to retire from the firm without consideration, he receiving his discharge under the composition settlement; but the subscriber Adam Anderson hereby restricts his liability under this obligation to the sum of One hundred and thirty-five pounds and no more.” M'Laren failed to pay the instalments as agreed on, except the first, and this action was raised against Anderson as being liable under the obligation just quoted. The petition concluded for £49, lls. 8d., as the proportion of the sum of £135 secured by the defender to which the pursuers were entitled in respect of the last instalment of composition on their debt, amounting to £149, lls. 3d. The defender averred that it was the duty of the creditors, and of Mr Tolmie as acting on their behalf, to insist on Ai ‘Laren's punctually lodging fortnightly instalments to meet the instalments of composition and that he had relied and was entitled to rely on their doing so, but that they had neglected to fulfil this condition of the obligation. He pleaded that he was therefore freed from his obligation; also that the cautionary obligation was defective and insufficient.

The Sheriff-Substitute ( Guthrie) pronounced this interlocutor—“Finds that by agreement, dated 18th December 1876, the defender guaranteed to the creditors of Todd & M'Laren, drapers, Lanark, to the extent of £135, that James S. M'Laren would pay the last instalment of a composition of fifteen shillings per pound to them, due upon 15th December 1877: Finds that James S. M'Laren failed to pay the instalments of the said composition, and that consequently his estates were sequestrated on August 24, 1877: Finds that the last instalment of said composition is still unpaid; and that the sum sued for is the proportion of the pursuers ‘share thereof corresponding to the said sum of £135: Finds that the defender has failed to instruct any fault or omission on the part of the pursuers of such a nature as to discharge him from his liability under the said guarantee: Therefore repels the defences and decerns as craved,“Ste. With this note—… … “The guarantee is in favour of the creditors' of a party named, and I think it does not fall within the terms or the intention of the statute anent blank writs. There is a description of the grantees in which constat de personis, and that is all that the law requires—Ersk. iii., 2–6.”

The Sheriff ( Clark) adhered on appeal.

The defender appealed to the Court of Session, and argued—The cautionary obligation founded on was not addressed to anyone. The party entitled to found on such an obligation must be named in it. Or if there were a number of such persons, a trustee for them must at least be named. The Mercantile Law Amendment Act, which made it indispensable that cautionary obligations should be in writing, clearly implied that the person to whom the obligation was given should be named. The cases on this subject under the corresponding section of the English Statute of Frauds were therefore applicable Williams v. Lake, 2 Ellis and Ellis, 349; Duncan's Trustees v. Shand, July 19, 1872, 10 Macph. 984 (opinions of Lords Neaves and Benholme); Act 1696 c. 25; Act 19 and 20 Vict. c. 60; Mercantile Law Amendment Act (Scotland) 1856; Ersk. iii.2–6. The evidence showed that the debtor had not been so well looked after by the creditors as they had undertaken to do by the clause in the obligation (assuming it to be a good obligation), which related to fortnightly payments. That was a stipulation inserted in the defender's interest.

The pursuers' counsel was not called on.