'creditor' (that is, the right to require a title and caution), his plea of 'bona fides amounts to no more than his ignorance of a fact of which he FACTOR. had no suspicion, and which might be very improbable, but against the 'possible occurrence of which the law enabled him to guard himself." Payment ought not to be made to the creditor's factor as on behalf of PAYMENT TO the creditor, although the factor is in possession of the document of debt, and ready to deliver it up along with his own discharge to the debtor on payment, and although the factor has been in use to draw the interest. The document is with the factor for custody, not for realization; the receipt of interest is an act of administration, nowise implying that he has power over the principal; and the delivery of the document of debt, by one not authorized to give it up, operates no extinction of such debt or document. Payment made, in these circumstances, to a factor, who delivered up the document of debt (a promissory-note), was found no defence against a claim subsequently made by the creditor himself. The debtor had to pay a second time.1 The question, whether the simple delivery to a bank of a depositreceipt granted by them is a sufficient discharge of the debt constituted or represented by the receipt, was raised in Stewart's case, but did not require to be discussed. Lord Deas expressed an opinion against the sufficiency of the discharge by mere delivery. Cases sometimes occur in which a deficiency of title to discharge, on RE-INVESTMENT the part of the creditor, is supplied by an arrangement for the re-invest- OF MONEY PAID. ment of the money after it is paid up. Thus a sum lent on bond to a wife in liferent for her liferent use allenarly, excluding her husband's jus mariti, and to her lawful issue in fee, was called up, and a discharge was offered by the wife, and by her husband for his interest, and as administrator for their children. The debtor consigned the money in bank; and, an offer being made by the husband and wife to re-invest in the same terms as formerly, the Court found that the discharge as above, accompanied by the re-investment, was sufficient for the exoneration of the debtor.2 Of course the debtor, in that case, would require to see that the re-investment was duly made. That, however, is an objectionable footing on which to place a debtor; and the case will serve to enforce what was said before as to the convenience of having trustees interposed, when money is to be lent for behoof of one in liferent and another in fee. In a case somewhat similar, a capital sum had been appointed by a father, in his daughter's marriage-contract, to be invested by his heirs. for his daughter and her husband in liferent, and their children in fee; failing children, the capital sum was to revert to the spouses. But the marriage-contract contained no appointment of trustees, and did not otherwise provide for the administration of the fund. The Court, on the application of the husband, and after a tutor ad litem to the children had concurred, appointed a judicial factor under the marriage-contract, 1 Duncan, 24th Jan. 1851, 13 D. 518. 2 Scott Moncrieff, 25th Feb. 1846, 8 D. 548. DISCHARGE OF DEBTOR IN CHARACTERS. PRESUMPTION OF PAYMENT BY 1 with power to uplift and discharge the provision." The Court held the marriage-contract as substantially, though not in express words, creating a trust. Special care is necessary in framing a discharge, where the debtor is bound or liable in several characters,-for example, as a partner of two several companies, each of which is bound for the debt. In such cases, if the discharge is granted otherwise than upon full payment, the discharge of the party in one character-say the discharge of one of the companies, and of the partners as individual members of that company, does not relieve him from liability, in his separate character, as partner of the other company. Such liability remains undischarged. On this subject reference may be made to the case of Melliss, where the discharge granted to a company under the Bankrupt Act, 54 Geo. III. cap. 137, was found not to comprehend a discharge to the partners of the company as individuals. But in that case the creditor claiming from a partner, on the ground that he was not discharged as an individual, stood in circumstances somewhat peculiar, and the Court were not unanimous. When a debt is paid, the presumption is that the payment is made by the proper debtor. If the payment is not so made, the discharge or receipt ought expressly to state by whom the payment is made. Effect was given to the legal presumption on that point in the cases noted.* And if the creditor holds heritable or other security for payment of the debt, and the person paying is not the proper debtor, such person should obtain not only a receipt specifying that the payment is made by him, but also an obligation to assign the debt and security to him; and, if he makes any entry in account-books of the payment of the debt, he ought to make the same on the footing of the payment being an advance by way of loan to the proper debtor. The agents for the creditor in a heritable bond paid the interest on it out of their own funds, for several years, on behalf of the debtor, who was also their client, and granted receipts for the interest-stating (inter alia) that of said interest 'all concerned are hereby discharged;' and made relative entries in their books. The Court held that by their procedure they not only 'received 'the money, as acting for the heritable creditor, but paid it as acting for 'the debtor.' The Court accordingly found that the interest was discharged and extinguished; and that the agents could not afterwards obtain an assignation of the bond and security for the interest, from the creditor in the security, so as to acquire a preference for the amount of the interest paid by them over ordinary creditors of the debtor. The agents, when paying out the interest from their own funds, ought to have taken the receipts for such interest to themselves, with right to require an 1 Melville, 8th March 1856, 18 D. 788. Sharpe, 11th July 1829, 7 Sh. 901; Lindsay, 20th Jan. 1844, 6 D. 412. 3 Melliss, 22d June 1815, F. C. 4 Halyburton and Nisbet, both decided on 26th July 1711, M. 11,528. 5 Lord Fullerton, 11 D. 260. Tod, 13th Dec. 1838, 1 D. 231. assignation of the security, postponed of course to the cedent's security for the principal sum and future interests; and they ought not to have entered the payment of the interest to the debtor's account with them. They should have stated it in their books in a separate account as a loan from them to the debtor. In the following case, under different circumstances, a different result was arrived at. Payment of the interest of a debt, secured by heritable bond, was made for a series of years by the creditor's agent out of his own private funds, for the accommodation of the debtor. But the creditor's agent was not the agent of the debtor; and he retained in his own hands, undelivered, all the receipts which were granted for the interest. These receipts purported that the payment had been made by the debtor, and they contained an express discharge to all concerned.' Notwithstanding these unqualified terms, the receipts never having been delivered to the debtor, or to the debtor's agent, were held not to discharge the debtor, who had, in fact, paid nothing. The agent making the advance was accordingly found entitled to a postponed assignation of the security created by the heritable bond, so as to give him a preference over ordinary creditors of the common debtor, to the extent of the interest so paid.1 CHAPTER II. UNDER the head of extinction confusione there are a few cases of EXTINCTION considerable practical interest which may be shortly noticed. Thus, confusione. where the holder of a heritable bond over an estate buys the estate, and the amount of his bond is allowed him out of the price at settlement, he becomes the proper debtor in the bond, which is thus extinguished confusione. Though the estate shall be afterwards conveyed by a mortis causa deed to a stranger, the heir-at-law cannot claim the heritable bond as a separate subject.2 In cases of that description, however, it is usual and proper to execute and record discharges of debts, so as to clear the record of the apparent burden. The operation of the plea of confusio, and likewise the mode of excluding the plea, in certain cases, will appear by contrasting one or two decisions in which debts were held extinguished, with others in which they were not. I notice, first, cases of debts extinguished. 1. In the case of Forbes and Company, a debt due by an entailer, to the individual who happened to be heir under his entail, was held to 1 Wood, 20th Dec. 1848, 11 D. 254. 2 Hogg, 11th Dec. 1832, 11 Sh. 198. 3 Forbes & Company, 17th Nov. 1802, M. App. Taillie, No. 10. CONFUSIO. be extinguished on the creditor's succession to the debtor's unentailed as well as entailed lands; and not capable of being kept up as a debt against a succeeding heir of entail. The creditor, by his succession to the debtor's unentailed estate, became the proper debtor in the entailer's debts, and the obligation to pay, and the right to receive, concurring in one and the same person, the one extinguished the other. 2. In the case of Codrington,' a party succeeded to an estate as heir-male, and obtained himself served, not only heir-male, but also heir-of-line, to his predecessor; and intromitted with the rents. Thereafter, he took steps with a view to limit his liability as heir-of-line, by making up inventory, in virtue of the provisions of the Act 1695, cap. 24. He then paid the debts of his predecessor, taking assignations thereof to himself, his heirs and assignees. But it was held that, by his service as heir-of-line, and intromissions, without having previously taken the steps required by the above Act, he had made himself the proper debtor; and that his predecessor's debts, though assigned to him and his heirs and assignees, had become his debts, and were extinguished by his having paid them. 3. In the case of the Duke of Roxburghe,2 an heir of entail in possession redeemed a wadset,—that is, paid a heritable debt, secured by a deed somewhat resembling in its effect the modern bond and disposition in security, over parts of the entailed lands,--by taking an unconditional discharge. It was held that the wadset was thereby irrevocably extinguished. In Forbes and Company's case, the debt could not by any means have been kept up, after the succession of the creditor to his debtor's unentailed estate, assuming always that such estate was adequate to the payment of all the debts affecting it. Supposing it not to have been so, the heir might, upon application to the Court or by other judicial measures, have got the extent of the inadequacy proved, and himself, or some one else, found to be a creditor to that extent, upon the entailed estate and succeeding heirs of entail. In Codrington's case, however, it was an obvious error to expede a service as heir-of-line, and intromit with rents, before having done what was necessary for limiting the heir's liability, in terms of the Act of 1695. If these steps had been duly taken in the first place, the heir might thereafter have proved the deficiency of estate, and have kept up the debt to the extent of such deficiency, even if he had paid it. But the Duke of Roxburghe, if he intended to keep up the wadset, ought to have taken a conveyance thereof, reciting payment of the debt by him out of his own money, and disponing the wadset to himself, and his heirs or assignees whom soever. You can contrast these cases with the following, in which the debts were not extinguished:-- 1 Codrington, 31st March 1824, 2 Sh. App. 118. 2 Duke of Roxburghe, 9th March 1825, 1 Wil. & Sh. 41. 1. In the case of Crawford,' an heir of entail in possession paid up a bond of provision affecting the entailed estate, granted by a former heir to his younger children, and took an assignation to himself, his heirs, and executors. It was held that the bond was not extinguished confusione, and that the heir so paying was entitled to transmit the bond to his general representatives as a debt against the succeeding heirs of entail and the entailed estate. 2. In the cases of Lawrie2 and Welsh,3 likewise, heirs of entail in possession, who had paid up entailer's debts upon assignation thereof in favour of themselves and their heirs and executors, were found entitled to re-issue the debts to third parties as debts against the succeeding heirs and entailed estate. ENTAIL. Confusio requires that the two rights-that is, the full right to receive, and the full obligation to pay-shall concur, as in Forbes and Company's and Codrington's cases. But heirs of entail in possession are not personally HEIRS OF subject to the full obligation to pay the debts contracted by the entailer, or otherwise affecting the entailed estate. The heirs of entail in possession are the proper debtors only to the extent of the interest becoming due and payable on the debts during their possession of the estate. The entailed estate, and the heirs of entail, as a body or class, are the debtors in the principal sum. But, as any creditor may make a present of the debt to his debtor, so an heir of entail, as in the Duke of Roxburghe's case, can, if he thinks fit, discharge the debt absolutely, and thereby give the entailed estate the benefit of his payment. Under the head of Novatio, also, there are some cases deserving atten- NOVATIO. tion, as of great practical importance. I cite, first, cases in which the plea of Novatio was not sustained. A bond by a principal and cautioners, which had not been delivered up by the creditor, was found not innovated by a bill granted to the creditor by the principal debtor and a new cautioner. A bill, accepted by A. for the accommodation of the drawer, B., and indorsed to C., was found not innovated by an acceptance from B. (the real debtor) to C., the indorsee. The original bill had not been delivered up. Baron Hume, in his notice of this case, says,-'It is always much against the plea of novatio, that the creditor retains the original document of debt, for 'which, if he meant to abandon it, he could have no occasion.'5 A law-agent does not innovate his account so as to lose his hypothec, by taking a bill, bond, or promissory-note for the amount. A heritable bond of relief, granted in security of relief of the sums contained in two bills specifically narrated, is not vacated in consequence of these individual bills having been retired by subsequent renewals; 1 Crawford, 11th March 1809, F. C. 2 Lawrie, 7th December 1830, 9 Sh. 147. 3 Welsh, 11th February 1837, 15 Sh. 537. 4 Journeymen Dyers, 11th Feb. 1802, 5 Crow, 15th Dec. 1803, Hume 247. |