Scottish Court of Session Decisions

Subject_1 ARRESTMENT.
Subject_2 What Subjects Arrestable.

Competition, Daniel Forbes with Alexander Innes

Date: 2 February 1739
Case No. No 48.

A sum due by promissory note arrestable, though indorsed for value. This was before the act giving promissory notes the privileges of bills.

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

Patrick Crawfurd, merchant in Edinburgh, granted a promissory note to Robert Gordon, payable to him or his order, which came, by progress, in virtue of indorsations for value, into the hands of Daniel Forbes; and Mr Innes, being creditor to Gordon, arrested the same in Mr Crawfurd's hands, whereupon a competition ensued betwixt them.

It was pleaded for Daniel Forbes, That it was a privilege, amongst others, competent to bills of exchange, that sums due thereby could not be arrested for the debt of the person to whom they were payable, in prejudice of the indorsee, and which obtained with us, because the sums were not, by the form of the writing, payable simply to the original creditor, but to him, or his order; so that the debtor, by any such writing, could not, with certainty, know to whom he was debtor, until the bill did appear; and, consequently, till that time, no arrestment could affect the sums thereby due, without destroying the nature of these writings, and introducing confusion in trade. It is true, that the note in question (if the form is only to be considered) is not properly a bill of exchange, as indeed neither are our inland bills or precepts; yet, in reality, it is of the same import; it is an obligation payable to a creditor, or his order, which passes from hand to hand by indorsation; so that the debtor does not, the next moment after it is out of his hand, know who is his creditor, the last of twenty indorsees being the person, perhaps, who will make the first demand; and if it be granted, which cannot be denied, that such notes pass by indorsation, it must be a necessary consequence that the money therein contained is not arrestable for the debt of the person whose name stands in the note, no more than for the debt of any indorsee who may have purchased the same for value; and, as we have conformed ourselves to the law of nations, with respect to the indorsations of promissory notes, as well as bills of exchange, there is no reason why we should not allow the same privileges to the one as well as the other.

Answered for the arrester, It has always been understood, that the privileges of being exeemed from compensation, arrestments, and, generally, every other clog, except what appeared upon the bill itself, was only the privilege of bills; and, in several decisions, these privileges have been denied to promissory notes, for this reason, that they are not bills of exchange; so that now the nature of promissory notes is generally believed to be settled on the same footing as any other obligation. And it is a mistake to say, That the course of trade requires the extending the privileges of promissory notes, seeing commerce, betwixt one nation and another, is not carried on by these. It is true, a great deal of inland business is carried on in that manner; yet consuetude, in the case of an inland trade, is not of the same force to overturn the standing law, as an universal custom in foreign dealings; for foreign trade must be regulated by the general practice which constitutes what is called the law of nations, and to which the municipal law must conform; but, where subjects of the same country deal together, they being subject to the municipal law, ought not to be favoured in debording from the known established rules; hence it is, that bills are entitled to many privileges, which no other form of obligation in use amongst the subjects of this country are entitled to, but which ought not to be extended to any other writing.

The Lords preferred the arrester.

C. Home, No 113. p. 182.