Scottish Court of Session Decisions

Richard M'Nab, residing in Glasgow, obtained in the Sheriff Court at Glasgow a decree against Robert Macdougall, residing at Innellan, for £40, and employed T. C. Young, writer, Glasgow, to recover the amount. The latter caused a charge to be given to Mr Macdougall. The charge expired on 29th December 1892, and on that date Mr Young intimated to Mr Macdougall that a poinding would be executed unless payment was made on the following day.

On 31st December Mr Young instructed W. Warner, sheriff-officer, to poind the furniture in Mr Macdougall's house, situated about a mile and three-quarters from Dunoon.

On 3rd January 1893 Mr Young received from Mr Macdougall a letter dated 31st December 1892, enclosing a crossed cheque on the British Linen Company's Bank for the amount of the debt, but he was informed on inquiry that there were no funds in that bank to meet the cheque. He telegraphed to that effect to Mr Macdougall, and on the same day he returned the cheque by letter to Mr Macdougall, intimating that there were no funds. On the same date Mr Young wrote to W. Warner as

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follows—“We wrote you on 31st ultimo ordering poinding herein; we had this morning a letter from the debtor, dated 31st ultimo (but posted in Dunoon yesterday), enclosing cheque for £45, 9s. 5d. On inquiry we found there were not funds to meet it, and have returned it. We suppose you will have executed the poinding ere this. If not please do so at once.”

On 3rd January Mr Macdougall wrote to Mr Young—“Referring to cheque posted to you yesterday, I would ask you to hold same over till to-morrow, because, on account of the outer door of office at 57 West Nile Street being closed for a holiday to-day, I am unable to get at letter in box containing large remittance, which 1 require to lodge in bank to meet same.” This letter was received by Mr Young in the afternoon of the 3rd, and was acknowledged by him. On 4th January, after receiving Mr Young's letter of the 3rd returning the cheque, Mr Macdougall wrote to Mr Young—“I am sorry there should have been any hitch about the cheque. Ample funds now at credit, and I return you cheque, which please present again.”

On 4th January, shortly before 2 p.m., the cheque enclosed in Mr Macdougall's letter was received in Mr Young's office, and shortly afterwards his clerk on making inquiries ascertained that there were funds in the British Linen Company Bank to meet the cheque. Mr Young was absent from his office on business on that day from one to five o'clock, but on his return at five o'clock he was informed of what had had happened in his absence.

On 5th January, between ten and eleven o'clock in the morning, Mr Young sent the cheque to his bank, the Commercial Bank of Scotland, with a request that it should be presented specially at the British Linen Company Bank. It is the practice of banks on receiving such a request from a customer with regard to a crossed cheque to present it specially by messenger, and in compliance with Mr Young's request the cheque was presented at the British Linen Company Bank about eleven o'clock and paid. The officials of the Commercial Bank did not inform Mr Young of the payment till two o'clock in the afternoon. Mr Young then wrote to Warner, the sheriff-officer—“This has been settled. Please return decree on receipt, with note of your fees;” but the poinding had been executed by the sheriff-officer at the house of Mr Macdougall at one o'clock of that day.

Thereafter, in March 1893, Mr Macdougall raised an action against Mr M'Nab and Mr Young to have them ordained, jointly and severally, to make payment to the pursuer of the sum of £1000.

The pursuer pleaded—“(1) The defenders having wrongfully poinded the pursuer's furniture, they are bound to compensate him for the loss and injury thereby sustained, with expenses. (2) The pursuer, at the time of the poinding, not being indebted to the defender Mr M'Nab in any sum, the use of the diligence complained of was un-justifiable.”

The defenders pleaded, inter alia—“(1)

The pursuer's averments are not relevant or sufficient to support the conclusions of the summons. (3) The whole procedure under the said decree having been legal and regular, the defenders should be assoilzied. (4) The pursuer having suffered no loss or damage, the defenders should be assoilzied. (5) The pursuer having by his own actings caused the proceedings complained of, the defenders should be assoilzied.”

On 29th July the Lord Ordinary ( Kincairney) pronounced the following interlocutor—“Repels the pleas-in-law for the defenders: Finds that on 5th January 1893 the goods of the pursuer were wrongfully poinded on the instruction of the defenders, and that the defenders are liable in damages in respect thereof: Assesses said damages at £20, and decerns against the defenders for payment thereof to the pursuer.

“ Opinion—In this action of damages for wrongous poinding, the facts have been ascertained by a joint-minute. It does not bear a renunciation of probation, but when the case was called it was stated that the parties had no proof to lead. These facts, so far as they seem material, are as follows—[ His Lordship here stated the circumstances].

The question whether under these circumstances the poinding was wrongous, seems of considerable general importance. No decision in the Scotch Courts directly bearing on it was referred to.

While I think the question a very narrow one, I have formed the opinion that the poinding was wrongous, and that the pursuer is entitled to decree for £20, the amount at which the parties have assessed the damage by the joint-minute. I think it was the duty of Young to countermand his instructions to poind on the afternoon of the 4th of January, after he had received the cheque for the second time, had ascertained that funds had been placed in the pursuer's bank to meet it, and had retained the cheque in order to present it for payment. I am not prepared to decide against the defenders on any other ground.

No question has been raised as to the amount of the cheque. It has not been said that it was insufficient because it did not include the expense of the diligence. There is no point of that kind in the case. Had the amount of the cheque been paid in cash, that would admittedly have been sufficient.

I think the cheque was negotiated with due despatch. Young cannot be blamed for delay in obtaining payment.

Young was quite within his rights when on the 3rd January he returned the cheque and renewed, as he did, his instructions to the sheriff-officer to proceed with the poinding.

He would have been within his rights had he returned the cheque again on the 4th. But he did not do so. He cannot be blamed for not having been in his office from one until five o'clock. But when at five o'clock he was informed that the cheque

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had been returned, he was, I think, put to consider and decide whether he would return or retain it.

Had the pursuer at that time sent payment in cash, I do not think it could have been disputed that Young would have been bound immediately to certiorate the sheriff-officer, and to instruct him not to poind if he had not already done so, and if this had been a case of cash payment I think there can be no question that the defenders would have been liable in damages although they were not aware that the diligence had been executed after payment. Some material difficulty in countermanding the diligence might make a difference. A question might be raised if it could not be done except by telegram, but in this case there was no difficulty.

But I agree in the contention for the defenders that this cheque was not equivalent to a payment in cash. It did not discharge the debt, and had it been dishonoured the debt wonld have remained due, and the diligence would have been available. The case of Davis v. Gyde, January 27, 1835, 2 Adol. & Ellis, 623, may be an authority to that effect, although the grounds of judgment are in part founded on technical English rules, the reasonableness of which has not been apprehended in the Scotch Courts. The American case of Burnet v. Smith, July 1858, 64 American Dec. 290, quoted by the defenders, is to the same effect. But the same law is laid down in Bell's Prin. sec. 127, and I see no reason to doubt it.

The defenders further maintained that nothing short of a tender in money, or what was equivalent to money, could oblige a creditor to abstain from or stop his diligence. That proposition may be admitted generally, but cannot be affirmed without qualification. The defenders quoted in support of it Inglis v. M'Intyre, February 14, 1862, 24 D. 541. But I do not think that case in point. It was there held that a tender of payment made to the sheriff-officer, coupled with a condition which the debtor had not a right to adject, did not oblige or entitle the sheriff-officer to stop the execution of his diligence.

Although a cheque is not equivalent to a payment in money, it is not, if it be retained, to be disregarded entirely. ‘Until it has proved unproductive, the creditor ought not to be allowed to treat it as a nullity, or to sue the debtor as if he had given no security’— per Lush, J., in Currie v. Misa, 1875, L.R., 10 Exch. 153.

It appears to be settled in England that a cheque or bill accepted, although it be not absolute payment, is conditional payment, the condition being that it shall become absolute payment when honoured; and that, on the other hand, the debt shall revive if the cheque be not honoured— Currie v. Misa, supra; Byles on Bills (15th ed.), 372; Chitty on Bills, 127; Chalmers on Bills, 305. I do not know that that principle has been expressed in any Scotch judgment, but I think that I ought on such a point to follow the English authorities, there being, so far as I know, nothing repugnant in our own decisions.

Now, I think it ought to follow that diligence in execution should cease during the time when the cheque or bill bears the character of payment, and apparently, according to the English authorities, the cheque or bill has, as a general rule, that effect.

But it has not in every case received that effect, and the defenders maintain that it has been decided in England that it does not suspend diligence, and they quoted as authorities for that proposition Davis v. Gyde, supra, recognised in Belsham v. Buchan, 1822, 11 C.B. 191, and also in Byles on Bills, 374. So far as I have been able to discover, this exception to the general rule has been admitted chiefly or only in questions between landlord and tenant, it being apparently held that a landlord is entitled to distrain not with-standing that he has received a note or cheque from the tenant. But this exception from the general rule appears to have been deduced from certain distinctions known in the law of England, but unknown in the law of Scotland, between the degrees of debts of different characters. I have much difficulty in following the reasons for this limited exception to the general principle. I observe that Mr Chalmers suggests the propriety of reconsidering the judgments by which it has been established—Chalmers on Bills, 307—and if I can judge from the notes at the close of the American report which was quoted, the exception does not appear to be received in America. It was decided expressly in Judge v. Fisk, 1822, 42 American Decisions, 380, that the acceptance of a promissory-note suspends the landlord's right of distress.

I do not say that the acceptance of a note for rent would affect any security which the landlord might have. It has been held not to affect his right of hypothec— Swinton v. Stewart, June 25, 1766, 5 B.S. 477. But the question now is as to a diligence in execution.

The rule adopted in England seems in accordance with reason and principle. I cannot imagine that if a creditor accepts a bill, say at a few days' date, for his debt, as conditional payment of it, he could immediately commence diligence in execution, or (which is the same thing) would not be bound to stop diligence already ordered while the bill was current; and a bank cheque is by definition a bill of exchange drawn on a banker, payable on demand—Bills Act 1882, sec. 73. It seems to me that when a debtor's bill or cheque is not returned, he is entitled to think himself safe from diligence until the bill is matured or the cheque presented. If the pursuer's cheque had been returned immediately, he would have had an opportunity of paying in money, and so of avoiding the damage to his credit caused by the poinding.

It is true that if this be the effect of retaining a cheque, the creditor or his agent who holds a decree with an expired charge incurs a certain risk, but if he has no confidence in his debtor, his remedy appears to be to refuse to have anything to do with the cheque.

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Entertaining these views, I do not require to consider whether Young might or ought to have done more than he did on the 5th of January. It was no doubt possible for him to have got the money into his hands by ten or eleven o'clock on the morning of that day, and he might then have stopped the poinding by telegram. But on the whole, if I had held that it was not his duty to countermand on the afternoon of the 4th of January, I think he could not be subjected in damages for anything he did or failed to do on the 5th.”

The defenders reclaimed, and argued—The Lord Ordinary's decision was wrong. He had overlooked the fact that there was here no antecedent agreement to accept the cheque in payment of the debt, and as it was the debtor's duty to pay in cash, he could not succeed in any event unless he could show that Mr Young had accepted the cheque as payment on the 4th of January. In this case Mr Young had never accepted the cheque as payment of the debt.

Argued for pursuer—A tender to a clerk was tender to his master— Inglis v. M'Intyre, February 14, 1862, 24 D. 541. When the cheque was presented to Mr Young's clerk on the 4th of January, in his master's absence, he should have got payment by special presentment. If Mr Young did not intend to accept the cheque as payment, he should have returned it when he came home on the 4th. But he retained it, and thus acted wrongously. He also should have stayed the diligence. He kept the cheque intending to operate it, and by his actings showed that he had accepted it as cash. If a man accepted a cheque, or did not object to it as a cheque, it was equivalent to payment in cash— Polglaso v. Oliver, 1822, 2 Cr. & J. 15; Currie v. Misa, 1875, L.R., 10 Exch., 153. [ Lord Trayner—The law is clear if you can prove that the cheque was accepted as payment.]

At advising—