Scottish Court of Session Decisions

In 1876 Robert Hyman executed a disposition of certain buildings in Edinburgh to John Pascoe, who on 20th May 1879 disponed them to Charles Mark Palmer, M.P., carrying on business in South Shields under the name of the Tyne Plate-Glass Company, who was the pursuer in this action. Hyman was sequestrated on 30th October 1878, Thomas Dall, C.A., Edinburgh, being confirmed trustee on his sequestrated estate, and the purpose of the action, which was brought with Dall's concurrence, was to have J. B. W. Lee, Hyman's agent, ordained to deliver up the title-deeds of the subjects which had been disponed. Lee refused, pleading, inter alia—“The titles and documents referred to being hypothecated to the defender for his business accounts, and bills granted therefor, he cannot be ordained to part with them till due satisfaction be made.”

The amount of the account as stated by Lee was £278, 11s. 3d., and the following statement in regard to it was made by the pursuer upon record:—

“The amount of the account now claimed by the defender, which commences on 20th January 1876 and ends on 14th January 1879, is …	£278	11	3
… All accounts due by Hyman to the defender prior to 8th August 1878 were settled. The amount of the business account to the said 8th August 1878 is	238	6	10
Leaving …	£40	4	5
Mr Hyman was sequestrated on 30th October 1878, and the items in the account claimed between 8th August and that date amount to …	31	11	11
Leaving amount incurred subsequent to sequestration.	£8	12	6

Nearly all the charges between 8th August and 30th October relate to matters originated by the defender for his own security, and the greater part of which were never carried out. For these and the items incurred subsequent to the sequestration, relating chiefly to correspondence, &c., in connection with actions raised against the defender and the Commercial Bank, in which the pursuer was successful, the defender, if he has a claim, should rank therefor on the estate, but he has no hypothec over the titles in question therefor. If the titles are at once delivered up, the pursuer will pay the account of £6, 1s. 4d.”

Leaving out of view the alleged debt of £238, 6s. 10d., for which it appeared that bills had at various times been granted which it was averred had not been paid, it was further stated that a balance of £57, 10s. 5d. was still undischarged. It appeared that in payment of that last sum Hyman had granted a bill to Lee, the receipt for which was in these terms:—

“ Edinbr., 14 th Aug. 1878.—Received from R. Hyman, Esqre., his bill for £55, 16s., in payment of balance on cash account and business account, to be rendered as per my letter to him of the 12th—the feu-duties remaining unpaid—any mistakes to be corrected.”

There was also the following entry in Lee's business account to Hyman:—

“14 th Aug. 1878.—Received from you your bill pro £55, 16s., in payment of balance on cash account and business account to be rendered—feu-duties remaining unpaid.”

Lee discounted the bill with the Commercial Bank.

The pursuer, inter alia, pleaded—“(2) The defender having accepted a bill for the balance of his account as at August 1878, and discounted the same with the Commercial Bank, who are claiming therefor on the sequestrated estate of the said Robert Hyman, the defender must be held to have waived any right of hypothec which might otherwise have been competent to him.”

Another question related to the sum of £31, 11s. 11d., as set forth in the above statement by the pursuer, who averred that in any case so much of that sum as was incurred by the defender for his own security ought not to be covered by his right of hypothec. The facts on this point are sufficiently set forth by the Sheriff-Substitute ( Hallard) infra.

On 30th July 1879 the Sheriff-Substitute pronounced this interlocutor—…” Finds that the accounts upon which the defence of retention is founded have been all discharged down to 8th August 1878, leaving a balance due of £40, 4s. 5d., part of which was incurred prior, and part subsequently, to Hyman's sequestration on 30th October 1878: Finds that as to the portion incurred subsequent to the sequestration, and amounting to £8, 12s. 6d., no plea of retention on the defender's part is maintainable: Finds that there is no question between the parties as to the account for £6, 1s. 4d., the pursuers conceding that the defender's plea of retention is valid so far as that account is concerned: Finds as to £31, 11s. 11d., being the portion of the balance of £40, 4s. 5d., which was incurred between 8th August 1878 and Hyman's sequestration, that the same affords no valid plea of retention to the defender, so far as the same was incurred by and through steps taken by the defender to protect his own interests: Therefore, before further answer, remits the defender's said account of £31, 11s. 11d. to the Auditor of the Court of Session for taxation and report, with a request to said Auditor to state what portion, if any, of said account incurred between 8th August 1878 and 30th October 1878 was so incurred through steps taken by the defender for his own protection against Hyman's impending bankruptcy, and to state generally the nature of the business charged for by the defender in the said account; meantime continues the cause.

“ Note.—.… The main point at the discussion was whether a law-agent's light of retention of his client's titles is extinguished

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when the payment of the account is not in cash but by bill. It is thought that when an absolute discharge is given, as in the present instance, without any reservation of the right to retain the titles, that right inevitably falls. It is not a question of waiver. The claim to which the right is ancillary being extinguished, the right is extinguished along with it.”

The Sheriff ( Davidson) adhered.

After the Auditor (Mr Baxter) had reported, the Sheriff-Substitute on 17th November found “that on payment or consignation of £18, 11s. 9d. the pursuer will be entitled to decree of delivery as craved; continues the cause in order that such payment or consignation may be made.”

“ Note.—.… By taxation this sum [i.e., £31, 11s. 11d.] has been reduced to £26, 4s. 11d., and the question now to be determined, with the assistance derived from Mr Baxter's report, is how much of that £26, 4s. 11d. was incurred through steps taken by the defender for his own protection as a co-obligant with Hyman to the Commercial Bank.

The Auditor takes £13, 14s. 6d. out of it as subject to observation on that score. With regard to all but £9, 0s. 8d. of that sum, the Auditor seems to have no doubt that the items charged were for the defender's own protection. And after hearing parties in the debate roll, the Sheriff-Substitute is of opinion that the charges amounting to £9, 0s. 8d. fall under the same category. They relate to a conveyance by Hyman to the bank, and a relative agreement to which the bank, the defender, and Hyman were parties. The situation was this—The defender drew on Hyman the bills of which a list is appended to the agreement. These bills the defender discounted with the bank. A disposition ex facie absolute is granted by Hyman to the bank in security of these bills. It seems too clear for argument that by securing the bank the transaction was a security to the defender as a co-obligant. He was no longer in the independent professional position to which the privilege of retention or hypothec claimed by him properly belongs.” …

The pursuer made consignation in terms of the above interlocutor, and decree ordaining delivery was thereafter pronounced accordingly.

The defender appealed, and argued—To accept a bill of exchange in payment of the law-agent's right of hypothec did not operate as a waiver of that right. Even if by taking the bill, or granting a receipt such as the one here, the right of hypothec was affected, yet the right revived on the bill being dishonoured.

Authorities—Bell's Comm. ii. (5th ed.) 114; Hamilton, Aug. 9, 1781, M. 6253: Gairdner v. Milne, Feb. 13, 1858, 20 D. 564; Stevenson v. Blakeloch, 1 Maule and Selwyn, 535.

Argued for the pursuer—An absolute discharge of the account had been given, and consequently the right to retain the titles fell.

Authorities — Bell's Prin., sec. 1418; Cowell v. Simpson, 16 Vesey 280; Balde v. Symes, 1 Turner and Russell, 87.

At advising—