Bank of Scotland v. Morrison [1911] ScotLR 527 (27 January 1911)

Bank of Scotland v. Morrison [1911] ScotLR 527 (27 January 1911)

A creditor is not obliged to disclose suspicions of debtor's dishonesty to a cautioner during the subsistence of a money guarantee unless there is actual knowledge or connivance amounting to fraud. Mere suspicion or passivity does not discharge the cautioner. No prejudice to the cautioner was proved, and the bank's failure to communicate suspicions did not liberate the cautioner from his obligations.

Citation
[1911] ScotLR 527
Parties
Pursuer: Bank of Scotland; Defender: Charles Morrison
Jurisdiction
Scotland
Judgment Date
27 January 1911
Procedural Posture
Civil / Final Appellate Judgment
Outcome
Appeal dismissed; interlocutor of Lord Ordinary adhered to.
Legal Topics
Cautioner Liability, Creditor's Duty of Disclosure, Extinction of Obligation, Expenses in Litigation
Contract Banking Guarantee Law Cautioner Liability Creditor's Duty of Disclosure Extinction of Obligation Expenses in Litigation

Case Brief

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Parties

Bank of Scotland

Pursuer

Charles Morrison

Defender

Procedural Posture

Civil / Final Appellate Judgment

Legal Issues

  1. 1 Whether a creditor is obliged to disclose suspicions of debtor's dishonesty to cautioner during subsistence of guarantee
  2. 2 Whether failure to disclose such suspicions liberates cautioner from obligation
  3. 3 Whether prejudice to cautioner must be proved for discharge

Ratio Decidendi

A creditor is not obliged to disclose suspicions of debtor's dishonesty to a cautioner during the subsistence of a money guarantee unless there is actual knowledge or connivance amounting to fraud. Mere suspicion or passivity does not discharge the cautioner. No prejudice to the cautioner was proved, and the bank's failure to communicate suspicions did not liberate the cautioner from his obligations.

Court Disposition

Appeal dismissed; interlocutor of Lord Ordinary adhered to.

Orders

  • Decree as craved in favour of pursuers
  • Defender found liable for expenses, including additional expenses