Scottish Court of Session Decisions

Subject_1 BILL OF EXCHANGE.
Subject_2 DIVISION IV.

Possessor's recourse against the Drawer and Indorser.
Subject_3 SECT. II.

Negotiation of Bill.

William Alexander, Cashier for the Edinburgh Ropery Company,
v.
Robert Cuming, Shipmaster in Leith

Date: 9 January 1758
Case No. No 150.

A bill indorsed in security, found not to require negotiation. See Murray against Grosett, infra.

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Robert Cuming became debtor to the Ropery Company in sundry articles, amounting to L. 119: 8: 8½ Sterling. Upon the 25th September 1753, he fitted his account with Alexander Ogilvie, the Company's clerk; and not being in cash, he indorsed some bills to Ogilvie, particularly one accepted by James Cuming his brother, for L. 29: 9:11 Sterling; to which he added an acceptance of his own for the balance. Ogilvie, on the other hand, gave Cuming a copy of his account, with a note of the bills indorsed, and the following doquet subjoined:

“Received from Mr Robert Cuming the above bills L. 81: 16: 8½, with his own acceptance, of this date, payable in six months, for L. 37: 4s. Sterling, which, when paid, are in full of the above account; and the same is discharged for the Edinburgh Ropery Company.”

The Company received punctual payment of Cuming's one acceptance, and of the other bills indorsed, excepting James Cuming's bill above mentioned. It became due in March 1754; but the acceptor being by that time in a state of bankruptcy, the Company did not strictly negotiate it, trusting to the indorser for their payment, in respect of the conception of the above doquet. In June 1754, they protested the bill, and raised horning and caption upon it.

James Cuming's effects not being sufficient to pay above eighteen pence in the pound of his debts, the Ropery Company brought an action before the High Court of Admiralty, against Robert Cuming, for payment of the contents of the said bill.

Cuming, in his defence, alleged, That the bill was indorsed in solutum of the account; and not having been duly protested for not payment, recourse was not competent against him.—The pursuers, on the other hand, maintained, That by the docquet of the account, it appeared, the bill was only indorsed in security of the debt; and therefore there was no need for exact negotiation to entitle them to recourse.

The Judge found the defender liable in the contents of the bill, with interest from the citation.

Cuming, in a bill of advocation, pleaded, That it would be of the most dangerous consequence, to overlook a point so essential to commerce, as the exact negotiation of bills, and to sustain an action of recourse upon bills not duly negotiated.

Answered for the pursuers, The words of the doquet, which, when paid, clearly imply, that the bill was not taken in payment, but only in security pro tanto of the debt. An assignee in security is not bound to do diligence; neither can an indorsee in security be so bound. Where a bill is indorsed in payment, or for present value, recourse can only be had upon exact negotiation; because the indorser is no otherwise bound than by the indorsation: But where an indorsation of a bill is given in security of a former debt, or on condition, that, when paid, it shall operate a discharge of it, the indorsation is no more than a corroborative right. The indorsee is only obliged to apply the payment when made; and if the bill is not paid, the indorser is still liable in the original ground of debt.

‘The Lords refused the bill of advocation.’ See Murray against Grosett, infra, h. t.

Reporter, Strichen. Act. Rae. Alt. Montgomery. Fol. Dic. v. 3. p. 89. Fac. Col. No 82. p. 145.