John Swan, John Carruthers, John Pool, and James Martin, - Appellants; Alexander Blair, Treasurer of the Governor and Company of the Bank of Scotland, - Respondent
| Jurisdiction | Scotland |
| Judgment Date | 01 January 1835 |
| Date | 01 January 1835 |
| Court | Court of Session |
English Reports Citation: 6 E.R. 1566
FROM THE COURT OF SESSION.
Mews' Dig. iv. 150, 224; xiii. 1919, sub nom. Swan v. Bank of Scotland, S.C. 10 Bli. N.S. 627.
Ill GLARE & FINNELLY. SWAN V. BLAIR [1835] [610] APPEAL from the court of session. JOHN SWAN, JOHN CARRUTHERS, JOHN POOL, and JAMES MARTIN,-Appellants; ALEXANDER BLAIR, Treasurer of the Governor and Company of the Bank of Scotland,-Respondent. [Mews' Dig. iv. 150, 224; xiii. 1919, sub nom. Swan v. Bank of Scotland, S.C. 10 Bli. N.S. 627.] W. M. and others bound themselves by bond, jointly and severally, to pay to the Bank of Scotland such sums as should be drawn out by W. M., or be due from him, on a, cash credit opened by the bank, in his name; and the certificate of the bank accountant was to be held sufficient to ascertain the balance due, and to warrant execution of law for such balance (not exceeding £5000) against the obligors. W. M. drew on the bank by orders, written on unstamped paper, payable to bearer; and though these drafts purported to be issued in the town where the bank was situated, they were in fact drawn and issued at a place more than ten miles distant, and were also post-dated, and the bank agent knew that they were wrong dated in point of place and time. W. M., having become insolvent, was found to owe to the bank on the cash credit account upwards of £4000, as certified by the bank accountant, and for that debt the bank put the bond in suit against his co-obligors. held by the Lords (reversing the decree of the Court of Session), that no obliga^ tion arose on the bond to pay any balance alleged to' be due on drafts so drawn and issued, contrary to the provisions of the Stamp Act, 55 Geo. 3, c. 184, s. 13, which, in addition to penalties on the parties offending, declares, moreover, that a banker shall not be allowed any money paid on such drafts in account against the drawer or his representatives. The Appellants were co-obligors with one William Martin in a bond, for securing to the Bank of Scotland [611] repayment of monies advanced to W. Martin by the bank, or its agents. W. Martin became insolvent in 1831, and the Respondent on behalf of the bank took proceedings on the bond, and gave against the Appellants a charge for payment of upwards of £4300, alleged to be due to the bank in respect of the said advances of money, together with a penalty of £2000 mentioned in the bond. The Appellants presented to the Court of Session a bill of suspension of the charge, and the appeal is against interlocutors pronounced in that action. (The case is reported 13 Shaw, Dunlop, and Bell-, 403.) The facts, as collected from the pleadings, were these:-Mr. William Martin, writer in Lockerbie, which is upwards of ten miles distant from Dumfries, besides practising as a. writer, carried on from the year 1819 to 1831 a considerable business as a discounter of bills, but not having sufficient capital of his own to maintain this trade, he obtained accommodation from the Bank of Scotland at their office in Dumfries, by giving them bonds of caution for cash credit. The first of these bonds was granted in the year 1819 for £600, and the Appellant Swan was one of the obligors. W. Martin afterwards requiring a further credit, a new bond was granted in September 1825, in which all the Appellants and other persons, since deceased, became co-obligors with. W. Martin. This bond was in the common form of cash-credit bonds, and, as far as it is material to set it forth, was in the following terms: " We [obligors' names and descriptions] in consideration of a credit of £10,000 sterling, given by the directors of the Bank of Scotland to us, on cash-account, in name of me, W. Martin, with the said bank, at the office thereof in Dumfries, etc., do hereby bind and oblige ourselves, conjunctly and severally, etc., to pay to the said bank, and to [612] their treasurer for their behoof, etc., all such sums, not exceeding £10,000 sterling, as shall be drawn out from the said bank by me, W. Martin, or as may be contained, due, paid, payable or claimable on any drafts, orders, bills, promissory notes, receipts, guarantees, letters, obligations and documents whatever, drawn, accepted, granted, indorsed, or any how signed by me the said William Martin, or on my procuration, or liable on me by any 1566 SWAN V. BLAIR [1835] III CLARK & FINNELLY. legal construction, and whether discounted or paid to me the said William Martin, or to any other party, or retired by the said bank, or otherwise taken or holden by or for the said governor and company, all thereby ipso facto to be due hereon, and chargeable to the said cash account, and of all such sums hereon, to make payment aforesaid, whenever required, with legal interest, etc., together also with £2000 sterling of liquidate penalty in case of f ailzie, etc.; and any account or certificate signed by the principal accountant of the said governor and company, or by their agent and accountant for the ofiice where the said cash account may be kept, shall be sufficient to ascertain, specify, and constitute the sums or balances such as aforesaid, to be due hereon in principal, and thereon legal interest aforesaid, and shall warrant hereon all executorials of law against us conjunctly and severally, for such sums or balances in principal, and thereon legal interest aforesaid, and for the said liquidate penalty: Providing hereby that the said governor and company, and their aforesaid, shall not hereby nor by any execution or process whatever to follow hereon, have more from us (the co-obligors) than £5000 sterling, and thereon legal interest, from the date of demand, etc., but these presents, without limitation, shall be available and effectual against me the said W. Martin." [613] This bond contained no reference to the bond given in 1819, which latter however continued to be in force and to be operated upon, but the accounts were kept distinct. The bonds and cash credits were arranged, on behalf of the bank, by Mr. Barker, their agent in the branch at Dumfries, who, as the Appellants alleged, was well acquainted with the way in which Martin transacted his discounting business, which was this: The bank furnished Martin with unstamped printed checks or orders, all bearing " Dumfries " as the place of issue, and having blank spaces for the sums and dates; Martin filled up, and issued at Lockerbie, these blank drafts in the course of his business, and so continued his operations on the bank account from the date of the bond in 1825 until his bankruptcy in 1831. He did not carry on business in Dumfries. In the bond he was designated " Writer in Lockerbie;" and the annual accounts furnished by the bank during the currency of the bond were titled, " State of cash account in name of William Martin, writer, Lockerbie, with the Bank of Scotland, in books thereof at Dumfries." The checks or orders were used by him in discounting at Lockerbie, for his own profit, bills, which were made payable at the Bank of Scotland's office in Dumfries, charging, besides a commission, a higher rate of discount than was charged to him by the bank. The bills so discounted were generally transmitted from Lockerbie, in letters and parcels addressed to Mr. Barker,* the bank agent at [614] Dumfries, who discounted such of them as he considered good, and accounted to Martin for their proceeds, returning to him such bills as he refused to discount. Martin frequently discounted other bills, which did not pass into1 Barker's hands, and having, besides the discounting of bills, a variety of miscellaneous transactions in the line of his business, he used the bank drafts for these general purposes, sometimes sending them by a messenger from Lockerbie to Dumfries, and getting .back the cash from Barker; and he often gave such drafts to third parties for value, who afterwards drew the amount from the bank at Dumfries. Although all these drafts bore the printed \vord, " Dumfries," purporting to be issued * Specimens of letters and drafts: " John Barker, Esq. Lockerbie, 29 July 1826. I enclose in mixed notes the sum. of £721 0 0 Draft by Mr. William Mitchell - 10 0 0 731 0~0 Amount of bills, see Bill Book - ... 1041 10 6 £1772 10 6 I also enclose a draft on my account for £1000 sterling, cash for which you will send me by the bearer. I remain, eta. " Copy.-Draft enclosed. Dumfries, 31 July 1826. " To the agent of the Bank of Scotland, Dumfries. Pay the bearer £1000 sterling, and charge to account of, " £1000 sterling. (signed) Win. Martin." 1567 Ill CLARK 85 FINNELLY. SWAN V. BLAIR [1835] there, they were in fact issued at Lockerbie, and many of them were dated one or more days subsequent to the day on which they were actually issued or delivered by Martin. This post-dating of the drafts was alleged by the Appellants to arise from the circumstance of their not being expected to be presented to the bank until some time after they had been delivered at Lockerbie, on account of the distance. Most of the drafts were made simply payable to the " bearer," but some of them, given to third parties for value, were made payable to particular individuals, named in the drafts. The accounts of these transactions between Martin and the bank agent at Dumfries were settled and [615] doquetted annually, and the vouchers delivered up; as thus, "Dumfries, 6th April 1830. This account settled, vouchers exchanged, and the balance of £2687 4s. 4d. brought to the debit of new account at 1st ultimo . Signed William Martin." So also the account ending the 28th February 1831 was settled on the 13th of April following, and the vouchers mutually exchanged, leaving then a balance of £3266 14s. 4d. to the debit of the account. Martin became bankrupt in July 1831, and Mr. Barker was appointed trustee on his sequestrated estate...
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