DELEGATION. the new bills being obviously renewals, and the debt remaining undischarged. But, when a heritable security is to be framed for payment or relief of the sum in a bill, care should be taken to make the bond perfectly independent of the particular bill. The bond should be for the relief of the debt, and should declare that no innovation shall be inferred from taking new bills. Moreover, as already suggested with reference to bonds of relief in general, there should be an obligation to pay, not merely to the proper creditor, but also, in the cautioner's option, to the cautioner himself. It would be well also to preserve the old bills undischarged, marking on them that they are not to be made use of in addition to the new bills. On the other hand, and in contrast with these cases, it was decided2 that a bond by an heir of entail for the sum in a bill by the entailer,which bill was delivered up,-innovated the bill. The claim on the entailed estate was thereby lost, the liability being transferred to the heir of entail personally. And3 a creditor, holding a bill from two obligants, took a heritable bond from one of them, and delivered up the bill. The granter of the heritable bond became bankrupt within sixty days, and the bond was abandoned as struck at by the Act 1696, cap. 5; but the creditor was found not entitled to recur to the bill, and enforce it against the other obligant. This case illustrates the caution formerly given, when considering the operation of the above Act, as to the substitution of new in place of old securities. The creditor should have retained the bill, at least till the bond became unimpeachable. Delegation, as already observed, consists of the substitution of one debtor for another, the creditor remaining the same. Instances in which one debtor is substituted for another are not uncommon,-when lands, burdened with heritable debts, are sold, and the purchaser takes the place of the seller as to these debts. But arrangements of that nature require regular and formal deeds, expressly binding the purchaser, and releasing the seller. These, therefore, are not proper discharges by delegation. A proper case of such discharge arises where an assignable lease is fully transferred to a new tenant; the old tenant is thereby discharged of all liability, except for the rents which fell due prior to the transfer of the lease. As regards the subsequent rents, not only is the new tenant liable, but he is the only party liable. On the same principle, when a tenant died, and his heir became the acknowledged tenant in his room, the landlord was not only not a creditor of his deceased tenant's executors for the future rents, but was not entitled even to retain, for payment of such rents, funds in his own hands which belonged to the deceased.5 But, although the heirs of a landlord, who dies during the currency of a 1 M Nair, 16th Feb. 1827, 5 Sh. 372. 3 Black, 15th Dec. 1814, F. C. 4 Skene, 20th May 1825, F. C. 5 Duke of Gordon, 8th March 1791, M. 5444. lease, are the proper debtors in sums conditioned by the lease, to be paid to tenants at the end of their lease, for meliorations made during the lease, the landlord's executors are equally liable to the tenant; and the executors are not entitled to a declaratory judgment as against the tenant, that the personal or executry estate is not liable.1 PRESCRIPΤΙΟΝ. The extinction of debts by the negative prescription requires only a NEGATIVE short notice. Such extinction is allowed on the principle that payment is presumed; and I may here notice the essential distinction between the legal plea of prescription, and the statutory plea applicable to cautionary obligations. As to these last, the Act of 1695 operates in the same way as if every deed to which it is applicable had contained an express clause to the effect that the obligation should cease at the expiry of seven years from its date; except so far as it should be kept up by diligence done within the seven years. This is not a case of presumption. It is an absolute statutory limitation, operating the extinction of the obligation, without regard to any question as to presumed payment. The prescription of forty years, which alone is applicable in the case of obligations by ordinary bonds or the like, operates absolute extinction on the presumption of payment. This plea, when it has arisen, as regards such obligations, cannot be elided by reference to the debtor's oath, as is competent in the case of the triennial prescription of accounts, etc. The full term of forty years, however, must run in order to admit the plea. In one case, action for payment of a bond was raised and executed on the last day of the thirty-ninth year from the term of payment. From various concurring circumstances, there was a strong presumption that the debt had been paid or extinguished; but the Court held that the presumptive evidence was not conclusive; that, in order to be so, it ought to be utterly irreconcilable with the idea that the bond was still due; and that, the bond being ex facie an unexceptionable written document, effect must be given to it. In that case, the bond was found in the creditor's possession at the time of his death, which operated strongly against the presumption of payment. I noticed taciturnity as, in special circumstances, a ground on which TACITURNITY. to plead extinction of a debt; and you need only now be referred to the case of Thomson, in which the plea was sustained, and the principles applicable to it are well illustrated. You will also find the nature of the plea commented on by the Lord Justice-Clerk Inglis, in a more recent case in which the plea was not sustained.* 1 Walker and Others, 18th July 1857, 19 D. 1099. 2 Graham, 18th Dec. 1823, 2 Sh. 594. 3 Thomson, 8th Dec. 1849, 12 D. 276. 216. VOL. I. Y CAUTIONERS. CHAPTER III. HITHERTO We have been considering, for the most part, the case of DISCHARGE OF ordinary obligants, and the rules of law applicable to the discharge or extinction of their debt or claims. And now the case of cautioners, and the peculiarities in their position which give rise to a claim of liberation or discharge on their part, require particular attention. This subject is large and important, and the relative cases are very suggestive. The cautioner, although liable for the whole debt, has undertaken only an accessory obligation, which implies that there shall be a principal debtor bound. And, accordingly, one who is simply cautioner is not bound unless the principal debtor, as well as he, shall sign the obligation; nor if the debt guaranteed is allowed to prescribe. And, generally, every defence and objection against payment, competent to the principal debtor, is open to the cautioner also. Moreover, the cautioner, having undertaken for another, is entitled by law and in equity (if called on to pay the debt) to recover from the principal debtor. He undertook to pay for, and at the request of, the principal, and has the actio mandati against him. He has also right to an assignation of the creditor's claim against the principal debtor, and of the grounds of debt,the jus cedendarum actionum; and if (the case not being one of sequestration in bankruptcy) the creditor shall discharge the principal debtor, the BY DISCHARGE Cautioner is liberated, because the creditor cannot then assign his debt to the cautioner, so as to enable him to recover from the principal debtor.3 The cautioner's consent to the discharge of the principal debtor, however, will bar him, personali exceptione, from pleading that discharge as extinguishing his own obligation. And, in cases of sequestration, the cautioner is not freed from his liability in respect of any vote given or dividend drawn by the creditor, or of his assenting to the discharge of the principal, or to any composition. Nor is the cautioner liberated by the discharge of the principal debtor under a voluntary compositioncontract, if such discharge be qualified so as to preserve the obligation on the principal debtor, provided the extinction thereof would have the effect of freeing the cautioner. The difficulty in Smith's case was not one of principle; it arose from the very imperfect manner in which the qualification was expressed. The creditor, however, may lose his claim on the cautioner, not merely by granting voluntarily, without consent of OF DEBTOR. 1 Crichton, Dec. 1612, M. 2074. 2 Halyburtons, 12th July 1735, M. 2073. 3 Wallace, 13th Jan. 1825, 3 Sh. 433. 4 Fleming, 24th May 1823, 2 Sh. 336. 5 19 & 20 Vict. c. 79, s. 56. 6 Smith, 22d Nov. 1821, 1 Sh. 159; affirmed 7th June 1825, 1 Wil. & Sh. 315. the cautioner, a discharge to the principal debtor, but generally, by acting without such consent, so as really to prejudice the cautioner, or his claim and right of recourse against the principal debtor. Thus, if the creditor refuses payment of the debt after it is due, and when payment is tendered unconditionally, he will not be entitled afterwards to claim from the cautioner; or if the creditor enters into an illegal agreement with the principal to the prejudice of the cautioner.2 Lawson's was a case of judicial cautionry for a curator, and the act done was described by the Lord Ordinary Fullerton as equivalent to an extrajudicial recal of the curatory. And, a cautioner having relief not only against the principal debtor for the whole debt, but also against co-cautioners for their proportions, liberation was held to follow when the creditor, during the currency of the obligation, and before it was at maturity, discharged LIBERATION BY one of several co-cautioners without consent of the others, and appa- CO-CAUTIONER rently without any payment.3 The rule, that the discharge of one of several cautioners, without consent of the others, shall operate the discharge of all, is now absolute, being incorporated in the Mercantile Law Amendment Act.* But the enactment is expressly declared not to extend to the case of a cautioner consenting to the discharge of a co-cautioner who may have become bankrupt. And it has been found not to apply to cautionary obligations executed before the passing of the Act. It was also decided, that where three co-obligants were jointly and severally bound, ex facie as principals, though truly cautioners only, for a debt which was past due, the discharge by the creditor to one of the three who paid up onethird of the debt, not only of the sum which he paid, but also of all other claims at the instance of the creditor, reserving the creditor's claims for the two-thirds still unpaid against the other two obligants, did not operate the discharge of these two obligants. But in framing the discharge to one of several cautioners or co-obligants, care should always be taken expressly to preserve recourse against him for any share of further liability which may eventually arise by the insolvency of a co-cautioner; if it is the agreement of parties that he is to be liable for such share. The cautioner's jus cedendarum actionum gives him right to an assignation, not only of the obligation for payment of the debt guaranteed, but also of all securities held by the principal creditor, and which can be conveyed without prejudice to the creditor. And if the creditor shall, through neglect, have rendered stipulated securities unavailable, the cautioner will be liberated." The cautioner, moreover, is freed if the creditor is chargeable with material misrepresentation or concealment; for example, as to the real 1 Cooper, 27th June 1834, 12 Sh. 834. 2 Lawson, 17th May 1837, 15 Sh. 930. 3 British Linen Co., 25th Jan. 1853, 15 D. 314. 4 19 & 20 Vict. c. 25, s. 9. 5 Church of England Fire and Life Insurance Co., 17th July 1857, 19 D. 1079. 6 Fleming, 23d May 1826, 2 Wil. & Sh. 277; Storie, 3d June 1830, 8 Sh. 853. DISCHARGE OF LIBERATION OF CAUTIONERS FOR DISCHARGE BY NEW nature or amount of the obligation undertaken by the cautioner; or if he subscribes in reliance on the obligation of another, and is not made aware that such other has been already discharged; or if the conditions of the principal obligation are varied without his knowledge. In the case of Taylor, the obligant agreed to be collaterally bound for £100, towards a composition of 10s. per £1, to be paid by another; but the composition having been fixed at 10s. 6d. per £1, without consulting him, and the arrangement otherwise varied, he was held to be liberated. Again, where the cautioner said: 'I make a point of it that mutual discharges for byegones shall take place at least once every year,' and no such annual settlement took place with the principal debtor, the cautioner was held to be free.* Liberation arises in favour of the cautioners for the due discharge of an office where new arrangements are made with the principal (the party OF AN OFFICE. holding the office), which ought to be, and are not, notified to the cautioners, and where their consent to continue bound is not obtained. Such consent ought to be obtained expressly, and not left to implication. Where new arrangements were made with a bank-agent, increasing his responsibility, but without notice to his cautioners, the cautioners were found to be freed of their bond, although the agent's salary had been increased. And gross negligence on the part of the obligees or creditors, as intrusted with the oversight and superintendence of their agents, is enough to free the cautioners without any positively new arrangement. Thus, where bankers in Scotland allowed their agent to extend their business to England, contrary to the law of England, also to violate instructions, incur unusual hazard and loss, and become deeply involved, the cautioners, not being apprised, were held free. And where the accounts of a judicial factor were allowed to remain for several years unexamined, and were at last audited without notice to the cautioner, the cautioner was allowed to suspend, without caution, a charge for payment of the balance on the accounts; that is, he was allowed to try his objections to liability, without, as in an ordinary case, finding caution before being heard." Another point to be guarded against, on the part of the creditor of co-cautioners, is agreeing by positive contract to allow time to the principal debtor for fulfilling his obligations. A creditor making such agreement by positive contract, without the consent of the cautioner, or co-obligants, will liberate them. Lord Brougham, in Mackenzie's case, says, 'It is plain that a surety has an absolute right to be let off, if time 'is given to the principal by the obligee; that is, if time be given by 1 Royal Bank of Scotland, 20th July 2 Wingate, 4th Dec. 1829, 8 Sh. 185. 6 6 Leith Banking Co., 12th May 1830, 8 Sh. 721; affirmed 1st Oct. 1831, 5 Wil. & Sh. 703. 7 Pringle, 17th Nov. 1832, 11 Sh. 47. 8 Mackenzie, 23d Sept. 1831, 5 Wil. & Sh. 504; reversing the judgment of the Court of Session, 4th June 1830, 8 Sh. 862. |