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Thomas Galbreath - Court of Common Pleas - 1789


Reports of cases argued and determined
In the courts of common pleas and Exchequer Chamber
By
Henry Blackstone
1801


Pg.155

Wednesday Feb 11th 1789

Kilgour v. Finlyson, Galbreath, and Harper  

Indorsee against the ostensible endorsers, who also appeared to be drawers of a bill of exchange. Money paid, money had and received, account stated, Verdict for the plaintiff.

The circumstances of this case were as follow :  

The plaintiff was a warehouseman and factor, the defendants were also warehousemen and factors in partnership from Midsummer 1785, to the 28th of July 1787, when the partnership was dissolved, and notice of the dissolution given in the Gazette as under,  

“Notice is hereby given, that the copartnership between Thomas Finlyson, Thomas Galbreath, and Henry William Harper, of Bow church-yard, warehousemen, under the firm of Finlyson, Galbreath, and Harper, and also at Glasgow under the firm of William Harper and company, was by mutual consent dissolved this day; all demands upon the above firm will be paid by Thomas Finlyson of Bow church yard, who is impowered to receive and discharge all debts due to the said co-partnership.”
Witness our hands, this 28th day of July 1787,
Thomas Finlyson, Thomas Galbreath, Henry William Harper.
 

At the time of the above dissolution one Scott was indebted to the partnership in £758 and the partnership indebted to Sterling Douglas and Co. in £890. On the 21st of September, 1787 Finlyson drew the bill in question in the name of the late partnership on Scott, payable on the 23d of November following for £304. 2s., which Scott accepted. On the 9th of October Finlyson indorsed it, in the name of the partnership, to the plaintiff, who discounted it, by giving his own promissory note for £304. 3s. 6d. payable on the 25th of November, (the difference of 1s. 6d. being on account of the note being due two days later than the bill). This note of the plaintiff’s was indorsed by Finlyson to Sterling Douglas and Co. who discounted it, and received the money they had advanced by so discounting the note, back again from Finlyson, in part of payment of the debt owing to them from the partnership. When the note became due the plaintiff paid it to Sterling Douglas and Co. Two days before Scott’s bill became due Finlayson took it up, and gave in lieu of it another bill to the plaintiff, accepted by Lee, Strachan, and Co., but did not take back Scott’s bill. Afterwards Lee, Strachan, and Co.’s bill not being paid, and Finlyson having become bankrupt, the plaintiff brought this action against all the partners on Scott’s bill, which remained in his hands, and obtained a verdict.  

A rule being granted to shew cause why this verdict should not be set aside, and a new trial granted,  

Adair and Bond, Serjts. Shewed cause. They acknowledged that the action on the bill could not be supported, but contended that the plaintiff was entitled to retain his verdict, having paid money to the use of the defendants, at the special instance and request of a person authorised by them to receive and pay their debts.  

Le Blanc and Lawrence, Serjts. For the rule argued, that it ought to have shewn, that the money was actually paid in discharge of a partnership debt; if it were paid, when Finlyson had no right to pledge the credit of the partnership, it was not paid to the use of the partnership. But admitting that it was paid for a partnership debt, yet being paid without the knowledge and request of the defendants it could not be sufficient to raise an assumpsit. Finlyson had no authority to borrow money to pay their debt, or to contract for them without their consent. This case must be considered as already decided by Lord Kenyon in the (a) King’s bench.  

Adair replied, that in the case cited it was only holden that an action could not be maintained on the bill of exchange. The reason of which was, that the bill being negotiable, and going into the hand’s of persons who might not know the consideration for which it was given, must be binding when given, or not at all. The authority of the drawer must be independent of any application of the money. But no such inconvenience could arise from the action for money paid. It is admitted that Finlyson paid the money of the plaintiff in discharge of a partnership debt; he had full authority from the other defendants to receive and pay : he therefore applied to the plaintiff for his note at their special instance and request.  

Lord Loughborough – I was of opinion at the trial, that there was an equity in favour of the plaintiff, the money arising from his note being de facto applied for the benefit of the partnership, and the authority from the other partners giving him power to discharge their debts. But I am now convinced that I was mistaken. Consider the nature of this transaction : Finlyson applies to Kilgour to discount the bill accepted by Scott, and in part of the discount takes a promissory note from him; Kilgour, before Scott’s bill became due, changes it with Finlyson for another, accepted by Lee, Strachan, and Co., returns that, and takes Scott’s bill back again. Now all this was carried on, without any idea of the former partners being bound by it. On the 10th of October, long before the plaintiff’s note was due, the defendant applied to Sterling Douglas and Co. to discount it, who accordingly did discount it, but received the money back again in part of payment of their debt owing from the partnership. When this note became due the plaintiff paid it to Sterling Douglas and Co., but at that time no debt was owing to them from the partnership; the payment therefore of the plaintiff was not a payment to the use of the partnership. Though the money raised by discounting his note before it was due, was in fact paid in discharge of a partnership debt, yet he cannot follow the money through all the applications of it made by Finlyson.  

(a) Heath and Wilson Justices, of the same opinion.  

Rule absolute for a new trial.  




 

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