John Balfour and James Gibson - Giffor - Cler - Moncreif - Skene v. William Borthwick, for the East Lothian Bank - Cranstou - Lockhart [1822] UKHL 1_Shaw_131

UKHL
John Balfour and James Gibson - Giffor - Cler - Moncreif - Skene v. William Borthwick, for the East Lothian Bank - Cranstou - Lockhart
[1822] UKHL 1_Shaw_131
Cautioners Laying bound themselves with a Bank agent to be responsible to the Bank for all loss to be sustained through the acts of the agent, but limiting the amount for which they were to be liable to £5000, and the Bank agent having become bankrupt, indebted to the Bank in £15,000, on which a dividend was payable, leaving a balance of more than £5000—Held (affirming the judgment of the Court of Session) that the cautioners were not entitled to insist on the dividends corresponding to £5000 being deducted, and imputed in extinction pro tanto of their debt, or to an assignation to the £5000, so as to draw these dividends.In 1810, Thomsons and Company having been appointed agents in Edinburgh of the East Lothian Banking Company, granted, with Messrs. Balfour and Gibson, a bond for the faithful performance of their duty. By that deed Messrs. Balfour and Gibson bound themselves “as cautioners, sureties, and full debtors for and with the said Thomsons and Company in manner after mentioned;” and after reciting that the Bank had appointed “Thomsons and Company to be agents for doing all the business which the said East Lothian Banking Company may have to transact in Edinburgh and Leith, by honouring any draughts they may make on us, and negotiating bills payable in London, negotiating and getting payment of bills payable in Edinburgh and other parts of Scotland, and exchanging the notes of the said East Lothian Banking Company with the different Banks in Edinburgh and Leith: And seeing that it was agreed that we should find caution for our intromissions in manner after mentioned,” therefore Thomsons and Company, and the individual partners, bound themselves “to execute faithfully and diligently the trust committed to us as aforesaid,” and well and truly to “account to the said East Lothian Banking Company for all sums of money and notes of the East Lothian Banking Company, or of other Banks, (all which shall be deemed and reckoned sums of money,) which we the said Thomsons and Company shall be intrusted with:”—
“And that we shall pay and deliver to the said East Lothian Banking Company &c. all sums of money, or other funds or documents whatsoever, belonging to the said East Lothian Banking Company, in the custody of us, the said Thomsons and Company, when required to do so.”
—Then follows this clause:“And whatever claim may arise to the said East Lothian Banking Company against us, the said

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“But it is hereby provided and declared, that the cautioners before named are and shall be no further bound and liable, by virtue of this present bond of cautionry, than to the extent of £5000 sterling, payable immediately upon the loss, skaith, damage, expense, or claim arising, and a demand being made upon them therefor, with interest, &c.; to which sum of £5000 sterling, with interest and penalty as aforesaid, the foresaid caution as to them is hereby expressly restricted, without prejudice to the said East Lothian Banking Company, &c. to have recourse against us, the said Thomsons and Company, &c. for the full amount of the whole loss, skaith, damage, expenses, or claim which may be competent to them against us or our foresaids, in any manner of way whatsoever, by virtue of these presents.”
— The bond then concluded with an obligation by Thomsons and Company to relieve their cautioners in the usual form.In 1814 Thomsons and Company became bankrupt, and executed a trust, when it was found that they were indebted to the Bank in upwards of £15,000. For this sum the Bank ranked on their estate, from which a dividend of 4s. 1d. per pound was payable. Having made a demand on Messrs. Balfour and Gibson for payment of the full sum of £5000, to which the obligation was limited, the latter stated that they were willing to pay that sum, on receiving an assignation to the dividends corresponding to a ranking to that extent. This proposal was declined, and the Bank then raised an action in name of Borthwick, their cashier, stating that, “after applying the dividends received or to be received upon the said debt by the said East Lothian Banking Company, as creditors of the said Thomsons and Company, and individual partners thereof, there will still remain of the foresaid balance upwards of £5000 sterling due to the said East Lothian Banking Company,”—and concluding for payment of that sum.

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Footnote

* See Fac. Coll. Jan. 29. 1819, where it is stated (without giving the opinions of the Judges) that the decision was unanimous

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Appellants' Authorities. — Rusforth, 10. Ves. 409; Baillie, 12. Ves. 435. Respondent's Authorities. — Maxton, Jan. 17. 1777, (No. 1. Ap. Cautioner.)Solicitors: J. Campbell,— C. Berry,—Solicitors.

( Ap. Ca. No. 14.)