Hay & Co. v. Torbet [1907] ScotLR 250 (17 December 1907)

Hay & Co. v. Torbet [1907] ScotLR 250 (17 December 1907)

The account between the parties was not an account-current, and the presumption that payments extinguish earlier debts in order of date did not apply. The creditor's intention, as evidenced by the course of dealing and the form of the account, was to appropriate payments made after 1 August 1904 to debts incurred after that date. Therefore, the guaranteed debt was not extinguished by subsequent payments, and the defender remained liable for the sum claimed.

Citation
[1907] ScotLR 250
Parties
Pursuer: Hay & Company; Pursuer: Hay & Company, Limited; Defender: Robert D. Torbet
Jurisdiction
Scotland
Judgment Date
17 December 1907
Procedural Posture
Civil / Appeal From Sheriff Court to Court of Session Inner House Second Division
Outcome
appeal dismissed; judgment for pursuers affirmed
Legal Topics
Appropriation of Payments, Guarantee Liability, Account Current, Creditor's Intention, Change of Creditor, Extinguishment of Debt
Contract Law Commercial Law Guarantee Law Appropriation of Payments Guarantee Liability Account Current Creditor's Intention Change of Creditor +1 more

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Parties

Hay & Company

Pursuer

Hay & Company, Limited

Pursuer

Robert D. Torbet

Defender

Procedural Posture

Civil / Appeal From Sheriff Court to Court of Session Inner House Second Division

Legal Issues

  1. 1 Whether payments made by the debtor after the change in the creditor's identity should be appropriated to debts incurred before or after the change for the purposes of the guarantor's liability.
  2. 2 Whether the account rendered constituted an account-current giving rise to the presumption that payments extinguish earlier debts in order of date.
  3. 3 Whether the creditor's intention regarding appropriation of payments was sufficiently manifested to override any presumption.

Ratio Decidendi

The account between the parties was not an account-current, and the presumption that payments extinguish earlier debts in order of date did not apply. The creditor's intention, as evidenced by the course of dealing and the form of the account, was to appropriate payments made after 1 August 1904 to debts incurred after that date. Therefore, the guaranteed debt was not extinguished by subsequent payments, and the defender remained liable for the sum claimed.

Court Disposition

appeal dismissed; judgment for pursuers affirmed

Orders

  • Case remitted to the Sheriff to settle the question of interest.
  • Expenses in the Court of Session awarded to the successful party.