Public Trustee v Davidson
| Jurisdiction | Scotland |
| Judgment Date | 11 March 1925 |
| Date | 11 March 1925 |
| Docket Number | No. 51.,Case No. 349. |
| Court | Court of Session |
Lord Murray, Lord President (Clyde), Lord Skerrington, Lord Cullen.
WarTrading with the enemyBills of exchangeSexennial prescriptionInterruptionEnemy bank in United KingdomLicence to trade under supervisionScope of licenceTransactions that would have been carried through in ordinary courseTreaty of Versailles, 1919, Art. 300, Annex I. General Provisions, sec. 1.
Article 300 of the Treaty of Versailles, 1919 (which received the force of law by the Treaty of Peace Act, 1919, and relative Orders in Council), provides that prescription as regards relations between enemies shall be treated as having been suspended during the war; and by the Annex I. General Provisions, sec. 1, the parties to a contract are to be regarded as enemies when trading between them shall have been prohibited by law, order, or regulation, to which one of the parties was subject.
The London agency of a German bank, which at the outbreak of war in 1914 became an enemy by Order of the Executive Power, held a bill, drawn by a German subject and accepted by a Scotsman, which had been sent from Germany for collection. It had been the practice of the bank that, if bills so sent were dishonoured, no legal proceedings were taken against acceptors in this country, but the bills were retransmitted to the German office so that proceedings might be taken in the German Courts against the German endorsers. Licences covering the whole period of the war were issued to the London agency, empowering it to carry on banking business under supervision, to the extent of completing current transactions, so as to make its realisable assets available to its creditors, so far as those transactions would in ordinary course have been carried out through the London establishment. The bill in question, having been dishonoured on presentation, was retained by the London agency, which debited the German office with the amount, and filed a letter (which owing to war conditions could not be sent) to the German office intimating the circumstances.
In an action on the bill brought in 1922 by the Public Trustee (in whom the assets of the agency had come to be vested for the purpose of liquidation) against the Scottish acceptor, the defender pleaded prescription, contending that, as the licences permitted action to be taken on the bill, prescription had not been suspended.
Held after a proof (rev. judgment of Lord Murray) that, as an action on the bill was not a transaction that would in ordinary course have been carried out through the London agency, the licences conferred no right to sue, and that prescription had been interrupted in terms of Article 300 of the Treaty of Versailles; and, accordingly, plea of prescription repelled, and decree granted.
Question whether any form of licence would have been sufficient to elide the operation of Article 300 of the Treaty of Versailles.
On 2nd November 1922 the Public Trustee brought an action against James M. Davidson, fish-curer, 33 East Clyde Street, Glasgow, concluding for payment of 400, being the sum contained in a bill of exchange, payable on 25th August 1914, drawn by H. Wiskemann upon the defender and accepted by the defender and made payable with the Commercial Bank of Scotland, 303 Crown Street, Glasgow, to which the pursuer had right by Vesting Order of the Board of Trade (under the Trading with the Enemy Amendment Act, 1916), dated 6th July 1919.
The following narrative of the facts, as admitted on record or established at a proof, is taken from the opinion of the Lord President:
In this action the pursuer and reclaimer, who is the Public Trustee, as Custodian of Enemy Property under the Trading with the Enemy Amendment Act, 1914, sues the acceptor of a bill of exchange, drawn and accepted beforebut not payable until afterthe outbreak of war, for the amount of the bill. The bill is vested in the Public Trustee by an Order of the Board of Trade, dated 2nd February 1919, under the Trading with the Enemy Amendment Act, 1916. By this Order the Public Trustee is directed and empowered to take such proceedings for the recovery of [inter alia, the bill in question] as he may be advised. The drawer of the bill was a German national, the acceptor a national of this country. The bill was discounted in Germany, and at the outbreak of war was the property of the Deutsche Bank and lay in the London office of that institution. The Public Trustee's action is met by the plea of prescription; and in answer to that plea the pursuer founds on the provisions of the Peace Treaty, and particularly on Article 300 thereof and relative Annex. The defender duplies that the present case falls outwith the scope of those provisions, in respect of the terms of certain licences* to carry on
banking business granted to the London office of the Deutsche Bank during the war. The result is that the two questions which the litigation raises are (first) as to the effect of the provisions of the Peace Treaty founded upon, and (second) as to the effect of the licences referred to.
The history of the bill was shortly this. It was drawn by a German seller on a Scottish purchaser for the price of goods supplied. After acceptance by the latter the German drawer discounted it in Germany, and the bill was ultimately acquired by the Deutsche Bank at its Leipzig office. In accordance with the regular mode of operations which were followed by the Deutsche Bank before the war in the case of British acceptancesand which I shall have to explain more in detail later onthe bill was transmitted
by the Leipzig office to the London office of the Deutsche Bank. It was due for payment on 24th August or (with the days of grace) on 28th August of the year 1914. The bill was presented through the London office (acting under licence) on its due date, and dishonoured. The present action, raised on 2nd November 1922, is the first attempt that has been made to enforce the acceptor's liability by any form of legal remedy.
Article 300 of the Treaty of Versailles contains the following provision:All periods of prescription or limitation of right of action, whether they began to run before or after the outbreak of war, shall be treated in the territory of the High Contracting Parties, so far as regards relations between enemies, as having been suspended for the duration of the war. Then it goes on to say that they shall begin to run again at the earliest three months after the coming into force of the Treaty of Versailles. That provision is quite unqualified as to the effect of the suspension, and equally unqualified as to the duration of the suspension. In the first section or provision of the relative Annex there is the following provision:Within the meaning of Articles 299, 300, and 301 (we are concerned only with Article 300) the parties to a contract shall be regarded as enemies when trading between them shall have been prohibited by or otherwise became unlawful under laws, orders, or regulations to which one of those parties was subject. They shall be deemed to have become enemies from the date when such trading was prohibited or otherwise became unlawful. This provision deals with the case of contract; and, as between the contracting parties, enemy relations are held to be established the
moment any one of them is affected by a supervenient prohibition (emanating from the laws of his own country with regard to the war) of continued commercial intercourse with the others. Nothing is said of the possible effect of the removal of the prohibition in whole or in part, after it has supervened, by the grant of trading licenceswhether such licences apply to the whole of the war-period subsequent to their date, or to a part or parts of that period.
Evidence as to the practice of the London agency in dealing with bills sent from the German office for presentation was given at the proof by Mr Charles Augustus Hassam, who had been deputy sub-manager of the agency, as follows:By the Court.(Q.) Putting it in ordinary languageapart from the war, in a similar transaction, if the bill is dishonoured and no money can be recovered, would the London agency or Leipzig stand the loss? (A) Leipzig. The custom of the London agency, from the very commencement, was that, if a remittance was unpaid, it was returned at once to the remitter for him to take action. Examination continued.(Q.) In the case of this particular bill, when the bill was not paid, it was re-debited to Leipzig in the books of the London agency? (A.) Yes. (Q.) And do you say that is shown by the excerpt which was produced to the Commissioner? (A.) Yes. (Shown No. 58 of process.) That is an advice, dated 6th October 1914, that the bill had not been paid and was held here. By the Court.That is advised from the London agency to the Leipzig branch, but I was referring to another copy letter. Examination continued.(Shown No. 59 of process.) That is a debit note in which we say that we debit you for remittances which up to the present have remained unpaid, to a certain amount, totalling 3462, 8s. 11d., and it includes this particular bill of 400. That is a copy of the debit note passed by the London agency to the Leipzig branch, and you have an excerpt of that from the current account book. (Shown No. 60 of process.) That is the excerpt to which I refer. (Q.) After this bill was debited to Leipzig, had the London branch any further interest in it? (A.) No. In 1914 when war broke out there were a large number of British acceptances in the hands of the bank...
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