Scottish Court of Session Decisions

On 9th December 1908 William Inglis, Engine Street, Bathgate, brought an action against the National Bank of Scotland, Limited, to recover £189, 8s. 8d., being the amount of the payments made by him to meet a bill, originally for £200 and subsequently renewed for various sums, drawn by his father — in—law A. L. Muir and accepted by the pursuer, and subsequently discounted with the defenders' bank at Bathgate by their agent there, Alexander Sloan.

Pursuer averred that at maturity said bill was retired and debited to Muir's account in his bank pass book as made up by the defenders, and that after debiting the amount necessary to retire the bill there was a credit balance in favour of Muir; that he, the pursuer, was led by Sloan to believe that the bill had not been paid at maturity and had been induced from time to time to grant renewals thereof; that after Sloan had absconded, he, the pursuer, was given to understand by the defenders through their agent at Bathgate that the bill was still due and was induced to sign on 11th April 1906 another bill along with Muir for £150, having already paid part of the previous bills; that Muir's estates having been sequestrated on 9th February 1907, he, the pursuer, lodged a claim for the bill in the sequestration, receiving a dividend thereon, and at the same time paid the amount of the bill outstanding, with interest, to the defenders.

The pursuer further averred—“(Cond. 10) The pursuer has further ascertained that the defenders' said agent Mr Sloan, for whom they are responsible, was in the habit of manipulating the accounts of customers of the bank in order to cover his own defalcations, and that he so manipulated the account of Mr Muir. On a proper statement of Mr Muir's bank transactions with the defenders, it is averred, and it is the case, that the said bill for £150 had been extinguished long prior to the claims for payment made by the defenders upon the pursuer in respect thereof. Further, the defenders' said agent Mr Sloan, in the course of his manipulating as aforesaid of the bank books at said branch, with a view to deceiving the defenders and their inspectors when the latter came to examine his books, was in the habit of getting customers, on his representation to them that by so doing they would obtain easier terms from the defenders' bank, to sign bills blank in drawer's name, and, although appearing to be for a specific sum, without any value having been given therefor. In particular, he induced Mr Muir to sign such a bill for £785 dated 11th November 1905. No value was given by Mr Sloan or by the defenders for this bill. After Mr Sloan's departure this bill was found, unsigned by the drawer, in Mr Sloan's private house. The defenders obtained possession thereof after Mr Sloan's departure, and, against all banking practice, had said bill signed by their secretary Mr George B. Hart for and on behalf of the bank. At the time when it was so signed said bill was overdue. No entry of said bill was contained in the bank's books at the time, and the defenders had no right or title to intromit with said bill, nor had they given any value therefor. It is believed and averred that the bill, the renewal of which is contained in the said bill of 11th April 1906, was found in Mr Sloan's private house, and had been obtained by Mr Sloan from Mr Muir in the same way as the said bill for £785, and was dealt with in a similar way, and that the pursuer was induced by the defenders to sign the said bill for £150, and was kept

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in ignorance of the previous discharge thereof in order to make up to the defenders' part of the defalcations of their said agent Mr Sloan. The pursuer further believes and avers that the defenders ranked in Muir's sequestration for said bill of £875, and drew a dividend in respect thereof, as if their books disclosed they had given value therefor, whereas in fact said books contained no entry relative thereto, in the same way as there are no entries relative to said bill of £150. The pursuer believes and avers that the bank pass-book of Mr Muir as written and made up by the defenders only shows a debit balance of £53, 10s., whereas the defenders claimed in said sequestration for the sum of £558, 10s. 8d. as due on Mr Muir's current account over and above said bill for £785. In January 1907 the defenders raised an action in the Court of Session against Mr Muir, in which they sued Mr Muir for payment of said sum of £558, 10s. 8d., and also for payment of the amount contained in said bill for £785, but no mention was made in said action of the bill for £150 before referred to, although Mr Muir's name appears thereon as an obligant. A copy of the summons in said action is produced. It is further averred that in accordance with the statutory privilege conferred upon bankers by the Bankers’ Books Evidence Act 1879 (42 and 43 Vict. cap. 11), the defenders, along with their affidavit and claim in said sequestration, lodged an alleged true copy from their ledger of the current account of the said A. L. Muir, and by sworn affidavit appended to said account and referred to in the affidavit of Mr George B. Hart, their secretary, it was deponed on behalf of the defenders that the said account had been compared with the ‘original entries in the ledgers of the National Bank of Scotland, Limited, at their Bathgate branch, and that the said copy is a true and correct copy of the said account.’ A copy of said account is herewith produced and referred to. The pursuer believes and avers that said account is not a correct transcript from the ledgers of the said bank, and does not contain the said ‘original entries’ as existing prior to the date of the departure of Mr Sloan, but is an adjusted account prepared by the defenders at their own hands after the departure of Mr Sloan. It is averred that on a true examination of the books of the defenders' bank it will be found that the bill in question which the pursuer was called upon by the defenders to pay, and did pay as aforesaid, had previously been paid to the defenders long prior to its last renewal. In the examination in bankruptcy of Mr Muir, 22nd March 1907, the trustee asked the bankrupt if the sum of £200 entered in the copy of the bank account lodged and sworn to in the sequestration of Mr Muir at the date of the bankrupt's examination, along with the bank claim, as having been drawn out by him under date 7th May 1904, although not entered in his bank pass-book, was so drawn out. In the copy account now lodged by the defenders with their claim the said entry of the sum of £200 originally debited under date 7th May 1904 has disappeared, although the backing of said account is the same as was lodged with the original account, and is signed as sworn to by Mr George B. Hart on 18th February 1907. The defenders are called upon to produce an inventory of the bills and other documents found outwith the bank's office at Bathgate, and delivered to them after the departure of Mr Sloan by Mr William Bannerman, solicitor, Edinburgh, or by the said William Bannerman on behalf of Messrs Hamilton, Kinnear, & Beatson, W.S., Edinburgh.”

The defenders pleaded, inter alia—“(1) The pursuer's averments being irrelevant and insufficient to support the conclusions of the summons, the action should be dismissed. (2) The pursuer's material averments being unfounded in fact the defenders should be assoilzied.”

On 18th March 1909 the Lord Ordinary ( Salvesen), before answer, allowed to the parties a proof of their respective averments and to the pursuer a conjunct probation.

The defenders reclaimed, and argued—Condescendence 10 should be excluded from the proof. The other transactions which were there narrated would involve a far larger proof than the proof in this case. It was not relevant to support an averment of fraud to state that a party had been guilty of similar frauds against other persons on other occasions— A v. B, February 23, 1895, 22 R. 402, 32 S.L.R. 297.

The pursuer argued—Condescendence 10 was a relevant averment of custom on the part of Sloan of doing the same thing.