Scottish Court of Session Decisions

Subject_1 CAUTIONER.
Subject_2 SECT. IV.

Cautioner, how far Liable.

Patrick Rigg and Others,
v.
George Paterson and Charles Bell

Date: 16 November 1788
Case No. No 31.

A bond granted by two cautioners having been given up and cancelled, upon an erroneous idea that the obligation of the debtor had been fully implemented, it was found that the cautioners were nevertheless liable.

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Rigg, and the other heritors in the parish of Cupar of Fife, having employed a person to rebuild the parish church, Paterson and Bell granted a bond, obliging themselves, as cautioners, that the work should be properly executed.

When the building was finished, it was examined by two tradesmen appointed by the heritors, and they having declared their opinion that the builder had fulfilled the conditions of his bargain; the heritors, after making payment to to him of a small balance then due, gave up the bond to the cautioners, by whom it was cancelled.

It soon appeared, however, that the report of the two tradesmen was exceedingly erroneous, the walls of the church, from an improper construction of the roof, being in imminent danger of falling asunder. The builder himself having become insolvent, Rigg, and the other heritors, brought an action against the cautioners, who, in defence,

Pleaded: A cautionary engagement in the law of Scotland is merely literarum obligatio, which derives its whole efficacy from the subscription of the cautioner. If, therefore, he has not subscribed at all, or if his subscription has not been accompanied with all the statutable forms, this circumstance, though originating in mere inattention, will be fatal to the obligation. In the same manner, if a cautionary bond, however regularly executed, has been cancelled with the deliberate consent of the creditor, it cannot be made the foundation of any effectual action; and this, agreeably to the rule, Quod unumquodque eodem modo dissolvitur quo colligatum est. It is expedient, that cautionary obligations should be confined within the narrowest bounds, otherwise they would be attended with such danger, as would altogether preclude their use. Hence a cautioner having subscribed a bond of corroboration, which, owing to the inaccuracy of the writer, contained no obligation for re-payment of the sum lent, was found to be free. And, in a later case, where the manager of a banking company had been induced, in consequence of an erroneous statement of accounts, to give up a bond signed by two persons as cautioners in a cash-credit, it was solemnly decided, that although it was still competent to sue the principal debtor, no action could be sustained against the cautioners; 2d June 1749, Colt contra Angus, Kilkerran, p. 612. voce Writ; January 1784, George Home contra Archibald Malcolm and Thomas Stodhart, (not reported.)

Answered: In the constitution of a cautionary obligation, it seems to be established in practice, that nothing less than a written instrument, deliberately and formally executed, can be admitted. But after it is once properly constituted, this agreement must undoubtedly subsist, like every other, until it has been fulfilled by specific performance, or until it has been done away by another agreement, to which no objection, arising from the fraud or error of one or other of the contracting parties, can be stated. If a bond granted by a cautioner has been by any accident destroyed, it will not be said, that it may not be restored in an ordinary action for proving the tenor. And in the present case, as the cautioners could not have been allowed to avail themselves of their own fraud, in getting up their bond before the work was properly executed, no reason can be given, why they should be permitted, for the same purpose, to avail themselves of the fraud or fault of another. The decisions quoted do not support a contrary doctrine. In that of Colt contra Angus, there was an essential defect in the original agreement; and in the other, which has not been collected, some peculiarity must have occurred, which made room for an exception from the general rule; 5th February 1703, Gordon contra The Heirs of Johnston of Polton; Fountainhall, v. 2. p. 178. voce Presumption.

It was further contended for the defenders, That, at least to the extent of the sums paid to the builder, after the erroneous report of the tradesmen appointed by the heritors, the claim should be disallowed. This circumstance, however, had no weight with the Court, no precaution of this sort having been stipulated in the bond granted by the cautioners.

‘The Lords found the cautioners liable.’

Reporter, Lord Dreghorn. Act. Blair. Alt. Wight. Clerk, Gordon. Fol. Dic. v. 3. p. 119. Fac. Col. No 44. p. 74.