SHERIFF COURT OF LANARKSHIRE. IOU-Loan or other contract-Proof.-The pursuer sued for two sums of £50 each, contained in two IO U's granted by the defender and held by the pursuer. He averred that the money was a loan by him to the defender. The defender denied the debt, and averred that the pursuer and he were engaged in exploiting an invention; that the two sums were payments made by the pursuer to him with the view of exploiting that invention; that the two IO U's were granted as an acknowledgment of the receipt of the money; and that it was understood that the payments were to be regarded as on account until the discovery was further exploited. Held (rev. Sheriff-Substitute) that the defender was entitled to a proof of his averments, restricted, as the contract was unusual, to evidence by the writ or oath of the pursuer. This was an action for payment of the contents of two IO U's averred to instruct a loan. The SheriffSubstitute (BALFOUR) repelled the defences as irrelevant, and issued the following interlocutor: No. 82. LANARKSHIRE. Murdoch v Ross. Sheriff BALFour. GLASGOW, 31st January, 1907.-Having heard parties' Jan. 31, 1907. procurators, sustains the second plea in law for the pursuer; repels the defences, and decerns against the defender in terms of the prayer of the petition; finds him liable to the pursuer in expenses, &c. D. D. BALFOUR. Note. This action is brought by the pursuer for payment of two IO U's for £50 each, granted by the defender to him, and the defender is said to have borrowed these sums from the pursuer. The defender in his defences goes into a long explanation as to the pursuer and him being engaged in exploiting an application called "Germicide for the treatment of certain diseases, and the defender alleges that the two sums of £50 were payments made by the pursuer to the defender with the view of exploiting the application in question. He alleges that in pursuance of their agreement the defender imparted to the pursuer particulars of the application, and that in part consideration. of the trouble taken by the defender the pursuer paid to him the two sums of £50, and the two IO U's were granted as an acknowledgment of the receipt of the money, and that it was understood that the payments were to be regarded as on account until the discovery was further exploited. It is a singular thing that if this explanation is true, and the two sums of £50 were paid by the pursuer to the defender on account of services rendered by the latter to LANARKSHIRE. the pursuer, the defender should have made himself the Murdoch v Ross. debtor of the pursuer by granting the two IO U's in quesJan. 31, 1907. tion. It is clear that, if the explanation is true, the defender Sheriff BALFOUR. should simply have acknowledged receipt of the two sums March 28, 1907. of £50 on account of services rendered by him to the pursuer, and it is absurd to suppose that he would have granted to the pursuer documents of debt making himself the debtor of the pursuer when in point of fact the pursuer was his debtor, and had got the IO U's from the defender on account of services rendered by the defender. From the wellknown case of Thiem's Trustees v Collie, 1 F. 764, it is made perfectly clear what the effect of an IOU is, viz., that it is an unqualified acknowledgment of indebtedness on the part of the granter, and necessarily imports an obligation to repay. The judgments of the Lord JusticeClerk, Lord Trayner, and Lord Moncreiff are quite distinct upon an IOU being sufficient in itself to instruct the constitution and resting-owing of the debt, and I must give effect to the IO U's in this case as constituting a debt due by the defender, especially having regard to the unsatisfactory defence stated by him. The IO U's instruct that the defender is the debtor of the pursuer for £100, and if on the further exploitation of the application the pursuer is found to be owing the defender money he can bring his action of count and reckoning against the pursuer, but meantime he must pay his IO U's. The defender's averments are quite wanting in specification as to what the different interests of the parties were in the exploitation, and if the defender chose to make himself the debtor of the pursuer before the adventure was closed he must pay the IO U's. D. D. B. On appeal the Sheriff (GUTHRIE) reversed. His interlocutor was as follows: GLASGOW, 28th March, 1907.-Having heard parties' Sheriff GUTHRIE, procurators in the appeal and considered the cause, recalls the interlocutor of 31st January last; allows the defender to prove his averments by the writ or oath of the pursuer; and remits to the Sheriff-Substitute to proceed with the W. GUTHRIE. cause. Note. In the rather numerous cases that have been decided in this department of the law certain propositions seem to be settled. The mere passing of money does not prove a loan to the receiver; not even if he gets it by a cheque which he indorses (Haldane v Speirs, 10 Macph. 537). The production by the lender of an acknowledgment that money has been received, not specifying the cause to be LANARKSHIRE. such as the payment of an account or other debt, leads to Murdoch v Ross. the inference that the money was received on loan, and is March 28, 1907. to be repaid (Thomson v Geikie and other cases in Bell's Sheriff GUTHRIE. Principles, sec. 202A, note (b); multo magis, where there is an acknowledgment of debt, as in IO U's (Haldane cit.; Thiem's Trustees v Collie, 1 F. 764). The repayment of a loan so established can be proved only by writ or oath of the creditor (Thiem's Trustees cit.); and I was clearly wrong in allowing in that case an open proof. That is all that was really decided in that case, although it contains many suggestive dicta. To prove loan of money it is not necessary that the writing founded on should be holograph or probative (Paterson v Paterson, 25 R. 144). I agree with Sheriff Balfour's note so far as it lays down that an IOU is in itself evidence of a loan. But I think that he has omitted to notice that such writings are not seldom used for other purposes than to instruct a simple loan of money, and that the granter has in repeated cases been allowed to redargue the presumption arising from the terms of the writing. This is particularly conspicuous in the English authorities referred to in the opinions of the judges in the Court of Session when the question of IO U's has been discussed; and it is explicitly stated by Lord Cowan, one of the majority in Haldane v Speirs, that an obligation to repay is constituted by an acknowledgment such as this, "unless the party who has received the money shall establish that it was paid to extinguish some counter obligation, or to satisfy some other demand which he had against the advancer "; and like observations occur in other opinions in that case. The cases of Neilson's Trustees, 11 R. 119; Welsh's Trustees v Forbes, 12 R. 851; and Thomson v Geikie, 23 D. 693, show that "it is competent to the granter"in the words of Lord Wood, a very high authority" to rebut the legal presumption by competent evidence instructing that the money was paid over on a different footing (from loan), what is competent evidence depending on the nature of that which is proposed to be established." I think that many remarks of the judges in the cases show that that qualification applies to IO U's, and it is notorious, and is recognised in the cases, that these documents are used for other purposes than the simple constitution or proving of an obligation to repay a loan of money. It seems to me that this rule is conformable to the principles generally applied to the construction of writings and contracts (Addison on Contracts, 44, 1048; Bell's Principles, sec. 534, ad fin., cases cited); and that Sheriff GUTHRIE. LANARKSHIRE. the defender has relevantly averred facts and circumstances Murdoch v Ross. which lead to the conclusion that no intention of repayment March 28, 1907. existed when the IO U's were granted. The kind of arrangement between the parties which he avers is, however, of an unusual and anomalous kind, the proof of which should, in my opinion, be restricted, in accordance with Lord Wood's dictum, to the writ or oath of the pursuer. I come to this opinion, however, viz., that the proof should be so restricted, with doubt, after the observations of Lord Trayner in Thiem's Trustees on p. 778. W. G. No. 83. LANARKSHIRE. Springburn Brick and Quarry Co. v M'Kean, &c. Feb. 14, 1907. For pursuer-Mr. JOHN MURDOCH (Messrs. C. B. AIKMAN & For defender-Mr. DAVID HENDERSON (Messrs. HONEYMAN, SPRINGBURN BRICK AND QUARRY COMPANY, Pursuers; GEORGE BOYLE M'KEAN and Another, Defenders. Partnership-Constitution-Joint adventure-Advance to builder-Liability of lender for goods.-Under an agreement between an accountant and a builder an advance was made by the accountant to the builder to enable him to erect buildings. It was provided in the agreement that interest at 10 per cent. should be paid on the loan, and that the lender should have the control of all cash matters, the paying of accounts and tradesmen's wages, and the engagement and dismissal of the men employed in the work; and that he was to get a conveyance of the subjects to be built in security of the advances. The conveyance was granted, as well as a back letter showing that it was only in security. In an action for the price of bricks supplied for the work, held that the lender-whose concern was solely to have security for his loan and interest on it, but who was not to share in any profitswas not a joint adventurer with the builder, and was not liable for the account. The facts are fully narrated in the judgment of the Sheriff-Substitute (BALFOUR), which was as follows: GLASGOW, 14th February, 1907.-Having heard parties' Sheriff BALFOUR. procurators and considered the case, in respect the defender Watson has failed to lodge a notice of appearance, holds him as confessed; decerns against him for payment to the pursuers of the principal sum and interest concluded for, and finds him liable to them in expenses as in a decree in absence; further sustains the first plea in law for the defender M'Kean; dismisses the action quoad him; and finds the pursuers liable to him in expenses, &c. D. D. BALFOUR. Note. This is an action for payinent of the sum of and Quarry Co. v M'Kean, &c. Sheriff BALFOUR. £71 12s. 10d., being the price of bricks supplied to the LANARKSHIRE. defenders, who are said to have been carrying on a joint Springburn Brick adventure under a building contract. M'Kean, one of the defenders, is an accountant in Glasgow, and Watson, the Feb. 14, 1907. other defender, is a builder, and money was advanced by M'Kean to Watson in connection with the alleged joint adventure under the agreement No. 9/1 of process. That agreement is peculiar in its terms. It bears that M'Kean has agreed to give building advances to Watson to the extent of £350 for the purpose of enabling Watson to erect property at Bardowie, and it provides that M'Kean is to be allowed interest on his loan at the rate of 10 per cent., and that Watson is to be credited with bank deposit rate. It is not stated that interest is to be payable yearly, but only one sum of interest at 10 per cent. is provided for. The agreement further provides that M'Kean is to keep Watson's business books, and is to be paid a salary at the rate of £30 a year; and M'Kean is to pay all the business accounts and tradesmen's bills, and Watson is taken bound to submit to M'Kean all invoices, time-sheets, &c., for approval and checking; and it is provided that M'Kean is to have the control of all cash matters, but is in no way to be personally liable to pay any of the accounts. It is further provided that, in security of his advances, M'Kean is to get a conveyance in security of the subjects to be built, and that M'Kean is to have control of the men employed, with power of engagement and dismissal, and that all receipts for cash are to be signed by Watson, and M'Kean is to pay no cash except to Watson. It is lastly provided that Mr. Girvan, solicitor, is to act as law agent for Watson in all matters connected with the work, and it was stated at the debate that Mr. Girvan was M'Kean's solicitor, but this is not admitted by M'Kean. There is no doubt that under this agreement M'Kean was practically to have the sole control of the building operations. At the same time the agreement distinctly states that the money (£350) is advanced as a loan to enable Watson to erect the property in question, and there was an absolute disposition granted by Watson to M'Kean to the property in question, which was qualified by a back letter granted by M'Kean to Watson, dated 9th February, 1906. That back letter, which is No. 9/3 of process, states that, although the conveyance bears to be ex facie absolute, yet M'Kean truly holds it in security of his loan or building advances to Watson, already made or to be made in connection with the property. The whole transaction constituted by the agreement, the conveyance, and the back letter instructs a loan or building advance by M'Kean to |