Scottish Court of Session Decisions

Subject_1 BILL OF EXCHANGE.
Subject_2 DIVISION I.

Of the Object, Nature, and Requisites of Bills.
Subject_3 SECT. VII.

Whether Bills require Intimation.

Ker
v.
Chalmers

1737. February.
Case No. No 61.

Though a simple indorsation on the back of a bill makes a full conveyance, without necessity of intimation; a draught upon a debtor must be intimated; so as to give preference, if not accepted.

Click here to view a pdf copy of this documet : PDF Copy

Richard Burn of Clarkston, drew a bill dated 30th July 1731, upon Sir James Dalziel of Binns, for L. 800 Scots, payable to Ker of Houndwood, or order, betwixt and Martinmas then next. This bill was presented, and pretested for non-acceptance, 6th May 1732.

Burn drew another bill, dated 6th August 1731, upon Sir James, for L. 25 Sterling, payable to John Parkhill, or order, against Whitsunday thereafter; which was indorsed to Alexander Chalmers; and protested for non-acceptance upon 7th August 1731.

Ker, the pursuer of this action, representative of Ker of Houndwood, to whom the first-mentioned bill was payable, in a competition before the Sheriff, pleaded preference on the debt due by Sir James Dalziel, as having the first bill drawn upon him. The Sheriff preferred Chalmers, holder of the second bill; as having the first protest for non-acceptance.

Ker raised advocation. Lord Elchies Ordinary ‘repelled the reason of advocation; found no iniquity; and remitted the cause.’

In a petition, pleaded, Intimation has not been considered as a necessary solemnity towards establishing a right by bill; Stair, Inst. b. I. tit. 11. § 7.; and b. 3. tit. 1. § 12.

Let it be supposed the debt due by Sir James Dalziel were constituted by bill. A simple indorsation would carry the right to it; and the indorsee could not be excluded by arrestment or assignation; neither could he run any risk for want of intimation; for having the bill itself, the acceptor could never be in bona fide to pay the contents to any other person. It could not be this case which Lord Stair had in view, when, in the paragraph first alluded to, he thus expressed himself:

“The first order carries right to the sum in the bill without necessity of intimation; yet payment made bona fide, by a posterior order, secures the payer.”

It must have been such a case as the present that Lord Stair had in his eye. And, according to his opinion, the first bill ought to be preferable; though Sir James might have been in bona fide to pay Chalmers, holder of the second bill, delivering up that bill to him, along with the original grounds of debt.

There ought to be no difference in point of law, whether the sum due by the common debtor, was originally constituted by bill, or any other document. The first draft upon him ought still to be preferable.

Upon the principles laid down by Lord Stair, b. 3. tit. 1. § 12. were the competition between a bill prior in date, and a posterior assignation intimated, there would be little doubt that the creditor in the bill would be preferable to the assignee; the assignation, without controversy, would be preferable to a second bill, drawn upon the debtor, after the date of the intimation of the assignation; therefore the first bill behoved to be preferable to the second, though the second were first protested. What answer can be made to this? unless it be maintained, that a bill, or order, is truly not preferable by its date; that it needs intimation as much as an assignation does; and that the only exception is of an indorsation upon the back of a bill, which, from the nature of the thing, cannot require intimation, because the indorsee, while he holds the bill, is secure that the acceptor will not pay to another. But if this be law, Lord Stair's doctrine must be erroneous; ‘that a bill drawn by a debtor, though not intimated to, or accepted by him, will be preferable to an arrestment or intimated assignation.’ If it be law, that a bill drawn upon a debtor, though not intimated to, or accepted by him, will establish a right in the possessor, so as to entitle him to be preferred to a posterior arrestment, or intimated assignation; it must be a necessary consequence, that a prior, must be preferable to a posterior, bill drawn upon the same debtor.

The petitioner's bill is not only first in date, but it is first payable. The second payable so long after the first, must have been meant only to carry the residue. If the competition had commenced, prior to Whitsunday 1732, Chalmers' protest would have signified nothing; he having nothing to demand before Whitsunday. The petitioner behoved to have been preferred, as having parata executio. Matters ought not to turn out otherwise, merely because the competition has happened after Whitsunday.

Answered, A debt constituted by bill, and one constituted by bond, decree, or open account, are in very different situations. A bill is, for the benefit of commerce, considered in law, as a bag of money; and enjoys a variety of privileges; which, in regard to bonds, &c. are not requisite. The debt originally due by Sir James Dalziel to Burns, was not constituted by bill; therefore the passage from Lord Stair, b. 1. tit. 11. § 7. first referred to, does not meet the present question, Lord Stair, when he mentions ‘payment made bona fide by a posterior order,’ must have meant, payment made on a bill, or an order on the back of a bill: For instance, a person takes two drafts, first and second, of the same bill; he indorses the first, and delivers it, or sends it by post, to the indorsee: The second he holds some time in his hands; and afterwards sends it with a posterior order, or indorsation, to a different person, who makes the first demand. The person drawn on pays bona fide.

The other citation from Stair, b. 3. tit. 1. § 12. that “intimation being, by our proper custom only, a necessary solemnity, holds not in orders, which stand for assignations among merchants, strangers especially, qui utuntur jure communi gentium;” this passage regards foreigners, and throws no light on the present question.

The argument that a bill prior in date is preferable to an assignation intimated, and consequently to a second bill, is inapplicable; for no conveyance of a debt, not constituted by bill, can have the privilege of indorsation of a bill, so as to be effectual without intimation. A bill not indorsed, would not be preferable to an assignation intimated, before the bill was presented to the debtor; consequently would not be preferable to a bill posterior in date, first intimated.

It is of no importance that the petitioner's, bill was first payable. For the second bill contains no intimation to the persons to whom it was directed, that any former bill had been drawn. It was a simple draft, to pay a certain sum, at a certain day. It was presented and intimated to the debtor before the prior bill. The first intimation completed the conveyance, whatever was the term of payment: Nor can the time when the competition occurred make any difference.

Lord Ordinary, Elebies. For Petitioner, H. Home. For Respondent, Jas. Geddes. Fol. Dic. v. 1. p. 97. Session Papers in Advocates' Library.