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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Fowlie v. Barnett & Co [1867] ScotLR 5_134 (21 December 1867)
URL: http://www.bailii.org/scot/cases/ScotCS/1867/05SLR0134.html
Cite as: [1867] SLR 5_134, [1867] ScotLR 5_134

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SCOTTISH_SLR_Court_of_Session

Page: 134↓

Court of Session Inner House Second Division.

Saturday, December 21. 1867.

5 SLR 134

Fowlie

v.

Barnett & Co.

Subject_1Bill of Exchange
Subject_2Blank Bill
Subject_3Sequestration
Subject_4Indorsation without Recourse — Fraud — Writ or Oath — Suspension.
Facts:

A party charged on a bill of exchange by parties who had acquired it by indorsation without recourse, alleged that if his subscription as acceptor of the bill was genuine it was originally adhibited to one of a number of blank bills which he had granted to the indorsers, and as, since his sequestration, he had had no dealings with the indorsers, that the filling up of the bill was fraudulent. Held that proof of these allegations of fraud was not restricted to writ or oath, the words on the bill “without recourse” presuming that the indorsees had made all proper inquiry as to the acceptor.

Observed by Lord Benholme, that the indorsation “without recourse” showed that the indorsees were conjunct and confident persons with the indorsers.

Headnote:

The suspender of this charge on a bill for a £100 is a spirit merchant in Edinburgh, and the chargers are watchmakers in Glasgow. The bill is dated 14th February 1867. It bears the signature of the suspender as acceptor, of Macnab & Co. as drawers, and the chargers, the present holders, are indorsees of Macnab & Co., the back of the bill bearing the words “Indorsed without recourse on Macnab & Co.” It was averred by the suspender that if the signature to the bill was genuine it had been fraudulently obtained, or turned to a fraudulent use. He stated that he had been sequestrated and discharged in 1866; that, prior to his sequestration, he had given to his brother-in-law, Pater Macnab, of the firm of Macnab & Ritchie, ironmongers, Edinburgh, some blank bill stamps; that he had had no dealings with his said brother-in-law or his firm since his sequestration; and that, on the assumption that the signature was genuine, the document in question must have been written upon one of these blank bill stamps which were given before his sequestration. He further averred that John Barnett & Co., the indorsees, well knew that the bill had been turned to a fraudulent use when they accepted of the indorsation without recourse upon Macnab & Co.

 Judgment:

Lord Jerviswoode allowed a proof of the allegations of fraud, remarking that the matter was one of some difficulty.

Barnett & Co. reclaimed, and craved that it it should be held that the proof of suspender's allegations should be limited to writ or oath.

Counsel were heard, and the bill was produced

Page: 135↓

and examined, and the bill stamp found to boar the figures 10, 5, 65.

Gifford and Asher for reclaimers.

Campbell Smith, and M'Lennan for respondent.

At advising—

Lord Cowan was of opinion that the interlocutor ought to be adhered to. It was averred that a blank bill stamp, granted by the suspender before his sequestration, and before the sequestration of Peter Macnab and his firm, had been filled up and indorsed to the charger. The mandate to fill up this document and convert it into a bill fell by the suspender's sequestration, and to use it, as it was said to have been done, was an act of gross fraud on the part of the drawers. As against the chargers, it was averred that they knew of the drawers' fraud, and that they received the bill in the full knowledge of how it had been fabricated. It appeared on the face of the bill that the stamp had been issued on the 10th May 1865, which was long anterior to the suspender's sequestration. That ought to have put the chargers upon their inquiry; but instead of inquiring they took an indorsation of the bill “without recourse” against the party from whom they received it. That was, to say the least of it, a very suspicious proceeding on their part, and he thought the circumstances disclosed, and the averments, were quite sufficient to warrant a proof by parole of the allegations of fraud and privity to it.

Lord Benholme concurred, being of opinion that the indorsation “without recourse” showed that the indorsees were conjunct and confident parties with the drawers and indorsers, and that, if the one party had committed a fraud, the other had a sufficient knowledge of it to bind them together in their interests.

Lord Neaves and the Lord Justice-Clerk also concurred, both laying great stress upon the date of the stamp; upon the suspender's sequestration, which was a public act of which the indorsees must be presumed to have known; and upon the indorsation “without recourse;” Lord Neaves remarking that Barnett & Co. must have been presumed, when they accepted of this indorsation “without recourse,” to have made very thorough inquiry about the acceptor.

The Court adhered, with expenses.

Solicitors: Agents for Reclaimers— White-Millar & Robson, S.S.C.

Agent for Respondent— W. Milne, S.S.C.

 1867

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URL: http://www.bailii.org/scot/cases/ScotCS/1867/05SLR0134.html