Balfour and Another v The Official Manager of the Sea Fire Life Assurance Comapany
| Jurisdiction | England & Wales |
| Judgment Date | 24 January 1859 |
| Date | 24 January 1859 |
| Court | Court of Common Pleas |
English Reports Citation: 140 E.R. 756
IN THE COURT OF COMMON PLEAS AND IN THE EXCHEQUER CHAMBER
S. C. 27 L. J. C. P. 17; 3 Jur. N. S. 1304; 6 W. R. 19.
balfour and another v. the official manager of the sea fire life assurance company. Nov. 7th, 1857. [S. C. 27 L. J. C. P. 17; 3 Jur. N. S. 1304; 6 W. E. 19.] Forbearance of a debt due from a third person is a sufficient consideration for the giving of .a bill or note.-To an action by indorsees against the drawers of a bill of exchange, the court refused to allow the defendants to plead, byway of equitable defence, that a debt was due to the plaintiffs from a public company which had professed to assign its business and obligations to the defendants, that the bill was afterwards given by the defendants in consideration of that debt, and upon the supposition that the assignment was legal and valid, whereas it proved to be illegal and void,-the proposed plea affording no defence to the action, either legal or equitable. This was an action on a bill of exchange for 5001., drawn by the Sea Fire Life Assurance Company, at sixty days' date, upon their cashier,-in the same form as the instruments in the cases of Ellison v. Oollingridge, 9 C. B. 570, and Allen v. The Sea Fire Life Assurance Company, 9 C. B. 574,-and indorsed to the plaintiff. Garth, on a former day in this term, obtained a rule calling upon the plaintiffs to shew cause why the de-[301]-fendants should not be at liberty to plead, in addition to a denial of the making of the bill, a plea, upon equitable grounds, to the following effect,-that, before the making of the bill, a debt was due to the plaintiffs from a company called the Port of London Sea Fire and Life Assurance Company, which company had, in October, 1849 (before the date of the bill declared on), professed to assign all their business and obligations to the. defendants; that the bill was afterwards given by the defendants upon the mistaken supposition on the part of the plaintiffs as well as of the defendants that the said assignment was valid, and for no other reason whatever ; whereas, in truth, the said assignment was a nullity, and the defendants were never under any obligation whatever to satisfy the said debt. Phipson and Or. Tayler now shewed cause. The proposed plea affords no defence to the action. At law, it clearly would be no defence. The defendants, at the time they gave the bill in question, had entered into an agreement whereby they professed to take upon themselves all the obligations of another company; and they gave the bill under an impression that they were bound to give it to satisfy a debt due to the plaintiffs from that other company. That was a perfectly good consideration. It is precisely like the case of Sowerby v. Butcher, 2 C. & M. 368. There, the defendant drew in favour of the plaintiff a bill which his brother ought to have drawn; and, though it was contended, that, as between the plaintiff and the defendant, there was no consideration for the drawing, the court held, that, as the defendant had chosen to draw a bill under circumstances in which the plaintiff had a right to have a bill, the defendant was bound: and Bayley, B., said : " He (the defendant) might have given a bill or not, as he thought fit, and he might have given a bill stating [302] on the face of it that he drew it for Robert Butcher (his brother); and, if he had stated that he drew it as agent, and had asked for a written acknowledgment that he should only be held liable as agent, he would have acted the part of a prudent man, and got rid of the personal obligation to which, by signing generally, a party is liable. But it 3 C. B. (N. S.) 303. BALFOUR V. THE SEA FIRE LIFE ASSURANCE CO. 757 is said there was no consideration for the defendant's binding himself personally. That is not necessary. He professes to bind himself personally: and the answer to the objection that there was. no consideration, is, that the plaintiff had a right to have a bill which should bind somebody." By the giving of the bill, the plaintiffs' remedy has been suspended, and the third party has had the benefit of that. Then, it is said that the proposed plea shews a defence upon equitable grounds. That clearly is not so. This is not like a case where a party has been induced to give the bill by. fraud or misrepresentation : nor is it a case for an .application to a court of equity to reform the contract. The defendant has no claim in equity to be relieved from the performance of his contract merely because it has been decided by the House of Lords that the amalgamation of these two companies, and consequently the agreement upon the faith of which the defendants drew the bill in question, was invalid. The plaintiffs have sustained a detriment by the suspension of their remedy and the insolvency of the other company. The proposed plea was disallowed by Cresswell, J., at chambers, because there was no equity in it. Garth, in support of the rule.. The plea proposed to be pleaded discloses matter which clearly amounts , to an equitable defence. The moment after the defendants had given the bill in question, if the plaintiffs had discovered that the assignment of the business by the Port of London Assurance Company was invalid, they might [303] have gone to their debtors and insisted upon being paid the amount of their claim, on the ground of the bill having been given under a mistake. Forbearance at his request during the currency of the bill, is the only consideration for the bill from a third party: Nelson v. Serle, 4 M. & W. 795. There, in a declaration against the defendant as maker of a promissory note, he pleaded that one J. W., before and at the time of his death, was indebted to the plaintiff for goods sold, and that the amount was due at the time of the making of the note; that the plaintiff, after J. W.'s death, applied to the defendant for payment, and the defendant, at the plaintiff's request, for and in respect of the debt so remaining due to the plaintiff, and for no other consideration, made the note and delivered it to the plaintiff; and that J. W. died intestate, and no administration was granted, and there was no executor of his estate, nor any person liable for the debt; and that there never was any consideration for the making of the note except as aforesaid : and it was held by the Exchequer Chamber,-reversing the judgment of the court of Exchequer,-that this was a good plea. [Cockburn, C. J, That is a totally different point.] In Byles on Bills, 7th edit. 109, it is said that "a debt, due from a third person is a good consideration for a note payable at a future day; and so is a debt due from the defendant and a third person " (a). " At least," adds the learned author in a note, " if the note be payable at a future day, for then the note amounts to an agreement to give [304] time to the original debtor, and that indulgence to him is a consideration to the maker. Secus, if the original debtor is dead, and has no representative: Nelson v. Serle, 4 M. & W. 795, reversing Serle v. Waterworth, 4 M. & W. 9, 9 Dowl. P.,C. 684. But, if the note be payable immediately, it is conceived that the pre-existing debt of a stranger could not be a consideration, unless credit had been given to the original debtor at the maker's request. Crofts v. Eeale, 1.1 C. B. 172, ace." Here^ the only consideration there could be was, the plaintiffs' forbearance to sue the original debtors: but, the bill having been given under a mistake, they were not bound to wait the sixty days. [Willes, J. Suppose A. supplies goods to B., and, for the. convenience of the parties it is agreed that he shall draw for the amount upon C., who is in the habit of receiving consignments from B., and therefore accepts,-both B. and C. being under the impression that the latter has or will have funds of the former's to meet the bill at maturity,-but it turns out that that expectation is fallacious; would that afford any equitable defence to C., to an action by A. upon the bill ?] Clearly not: but that is very foreign to the case now before the court, which is one of mutual mistake. [Cock-burn, C. J. Forbearance or delay being the consideration for. the bill, what is it to the plaintiffs that the defendants have mistaken their position with relation to the (a) Citing Popplewell v. Wilson, 1 Stra. 264, Coombs v. Ingram, 4 D. & K. 211 Sowerby v. Butcher, 2 C. & M. 368, 4 tyrwh. 320, Garnet v. Clarke, 11 Mod. 226, Bidout v. Bristow, 1 C. & J. 231, 1 Tyrwh. 84, WiUers v. Stevens, 15 M. & W. 208: and see Lechmere v. Fletcher, 1 C. & M. 623, Baiter v. Walker, 14 M. & W. 465, Walton v. Mascall, 13 M. & W. 452, Cook v. Long, Car. & Marsh. 51,0. 7.58 BALFOUR V-. THE SEA FIRE LIFE ASSURANCE CO. 3 G. B. (N. S.) 305. company whose rights and liabilities they had consented to take upon themselves ?] The bill would never have been given, but for the mistake : there was nothing binding the plaintiffs to forbear. [Cockburn, C. J. Suppose A. gives out to the world that he has taken B.'s business, and will liquidate all demands against him; and a creditor of B. comes and asks for payment of a debt, and agrees to take A.'s acceptance for it; and, during the currency of the bill, [305] A. discovers that B. has cheated him on the sale of his business,-would that be any answer to the creditor to whom the bill was given, and who has been induced to forbear 1] The present case is put upon the ground of mutual error in the original transaction. [Willes, J. The rule is, that, in the case of a mutual mistake, each party must bear his own share of the consequences of the error, unless it be a mistake in the very contract which is sought to be enforced. Have you any authority to shew that equity will reform a contract for some collateral mistake ?] In Spence's Equitable Jurisprudence, p. 63-5, it is said, upon the authority of Brooke, Conscience...
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