Scottish Court of Session Decisions

Subject_1 PART I.

BILL OF EXCHANGE.

John Cooper
v.
William Clark, and Robert M'Lintoch
v.
James and John Coopers and John Arthur

Date: 27 February 1777
Case No. No. 3.

Whether when a bill is indorsed after the term of payment, the usual recourse can be obtained?

Click here to view a pdf copy of this documet : PDF Copy

John Cooper, in Millhill, applied to William Clark, baker in Renfrew, for the loan of £100 Sterling. Clark could not advance the money, but proposed to indorse a bill for that amount due him by Wann and Watson of Portglasgow. To this Cooper at length agreed, but does not appear to have received the bill until the term of payment was past. Upon the 4th of January 1774, Cooper received from Clark Wann and Watson's bill of £100. due upon the 19th December 1773, and of the same date he granted his own bill conjointly with his father James Cooper, and John Arthur at Boghall, for £102. 10s. thus including the interest for six months, at which time their bill was payable. Wann and Watson could not pay the amount of their bill, which was therefore protested against them for not payment, and against Clark for recourse. Diligence was first raised and executed against the accepters of the bill; but being unable to recover the money in that way, Cooper was at last obliged to raise diligence against Clark, who presented a bill of suspension, which was passed.

The bill for £102. 10s. granted by the Coopers and Arthur to Clark had been indorsed by him to Thomas Whitehead, tanner in Paisley, at whose instance it had been protested, and horning raised upon it, But Whitehead, who had been only trustee for Clark in this business, upon being informed of the nature of the transaction, would have no farther concern with it, but, at Clark's desire, assigned, the protested bill and horning to Robert M'Lintock, merchant in Glasgow, who appears also to have been a confidential trustee for Clark. M'Lintock, having charged John and James Coopers, and John Arthur, for payment of the money contained in, their accepted bill to William Clark, they also obtained a suspension; and both suspensions came to be discussed before Lord Alva Ordinary.

In the first of these suspensions, at Clark's instance, the Ordinary was pleased to suspend the letters simpliciter; and in the latter, at the instance of Cooper, he found the letters orderly proceeded. These interlocutors, however, were brought before the Court by reclaiming petitions, in which, on the first suspension, it was maintained by Clark in his answers, that an indorsation to a bill of which the term of payment is past, is an assignation to that bill, importing that the sum assigned is due, and the assignee or indorsee takes the debt tantum et tale as it stood in the person of the original creditor. That there must, from the nature of the thing, be a distinction betwixt a bill which can be protested before the days of grace are expired, and a bill protested after the days of grace.

In the first case, the law indulges recourse: In the other no recourse is competent, the bill having lost the particular privileges attending strict negociation. For how could it be said, that a protest taken within the days of grace preserves recourse, against the drawer; if a protest taken long after the days of grace have expired, and the bill has become due were to have the same effect? In this view, the enactment of the statute for preserving the recourse upon the due negociation of a bill appears altogether nugatory.

It was contended by John Cooper, that this doctrine is contrary to the nature of bills, the practice of merchants, and the decisions of the Court, as well as the authority of our lawyers. For a bill is a mandate by the drawer, on another person, to pay a certain sum to the porteur; and by subscribing this mandate, he becomes liable for the sum therein contained, if the mandatary is either unable or unwilling to pay. But if the creditor is negligent in demanding payment, then he is answerable for the consequences; and in order to save the necessity of proof, it is held, presumptione juris et de jure, that if payment is not demanded within the three days of grace, he is guilty of so great negligence as must forfeit his recourse: But if the term of payment is already past, when it is impossible that he can observe the established rule of strict negociation; in that case the Court must have a discretionary power of determining whether the porteurs negligence has been so great as to merit the forfeiture of recourse. So it was determined in the case of Young against Forbes, 16th June 1749, No. 147. p 1580. which decision is strongly supported by what Mr. Erskine observes, B. S. T. 2. § 25. and there is no lawyer, ancient or modern, who has maintained a contrary opinion.

With regard to the secondsuspension, at the instance of James and John Coopers, and John Arthur, the Court found no difficulty in conjoining it with the former, as it appeared pretty evident, that M'Lintock was no onerous indorsee, but only acted as trustee for Clark's behoof: They therefore altered the Ordinary's interlocutor, and pronounced the following judgment, (Feb. 27, 1777) “Conjoin the two processes, find recourse due upon Wann and Watson's bill indorsed by William Clark to John Cooper; find the letters at the instance of John Cooper against William Clark orderly proceeded; sustain the said claim of recourse, in compensation of the bill granted by the said James and John Coopers and John Arthur to William Clark, indorsed by him to Robert M'Lintock, and decern; Find William Clark and Robert M'Lintock, conjointly and severally, liable in expenses, and allow an account to be given in.”

Lord Ordinary, Alva. For Petitioners, C.Hay. Alt. James Grant.

*** See No. 164. p. 1604.