ments quoted, the pursuer is entitled to decree, as concluded for. (3) No. 4. The defenders' statements are irrelevant; et separatim, they can only be proved scripto. Oct. 24, 1890. The defenders pleaded, inter alia;-(2) The defenders, being entitled Trustee v. to retain the bonds sued for until payment of the debt due to them, should Royal Bank be assoilzied, with expenses. On 5th November 1889 the Lord Ordinary (Kyllachy) allowed, before answer, the defenders a proof habili modo of their averments and the pursuer a conjunct probation, and on 7th December following the First Division refused a reclaiming note at the instance of the pursuer against that interlocutor. A proof, both oral and documentary, was led. From the letters which had passed between Mr Guthrie, the bank-agent, and Mr Souter Robertson and his sons, Mr George and Mr Thomas Robertson-Chaplin, and from Mr Guthrie's own testimony, it appeared that the latter had intimated his view that the bank held the bonds in security of overdrafts, and that Mr Souter Robertson had not dissented from that view. The details of the evidence and of the state of Mr Souter Robertson's account with the bank are fully given in the opinions of the Judges, particularly in those of the Lord Ordinary and Lord Adam. On 25th February 1890, the Lord Ordinary assoilzied the defenders.* "OPINION.-Having considered the proof in this case, I have come to the conclusion that the bank have established the lien which they claim. "Had it appeared that the receipts which are quoted on record constituted or fully expressed the contract between the parties, and had those receipts required to be construed without any help from outside, I should probably have felt compelled to come to a different conclusion. For I before observed that a deposit for safe keeping appeared to me to be prima facie a deposit for a special purpose, and a special purpose inconsistent with the general lien which the defenders claim. And I have seen no reason to change that opinion. It is true, as the defenders urge, that the deposit here was of negotiable securities, and it may be that, as between a banker and his customer, a deposit of negotiable securities has different incidents from, e.g., a deposit of plate. But if the deposit is expressed to be for safe keeping, and there is nothing to qualify that expression, I have not been able to see that a deposit of bonds is in a different position from, e.g., a deposit of plate. And therefore, although there have been dicta of some authority to the effect that a banker's lien extends over all paper securities placed for any purpose in the banker's hands, I am not, I confess, prepared, in the absence of direct decision, to carry the banker's lien so far. Indeed, as regards decision, the leading case on the subject, Brundao v. Barnett, decided in the House of Lords (12 Clark and Finelly, p. 787), appears to me to confine the lien within considerably narrower limits. For in that case the lien was held excluded where Exchequer bills (usually deposited in the banker's safe in a box, of which the customer kept the key) were handed to the banker to obtain payment of the interest due and to have the bills renewed, and where the customer failed, while the new bills still remained in the banker's hands waiting for redeposit in the customer's box. "But the question always is, what were the terms of the contract under which the deposit was made; and here I am not able to accept the pursuer's argument that it is illegitimate to look beyond the terms of the receipts which the bank granted to the deceased. For that argument implies that those receipts must be taken as expressing the final and whole contract between the parties, and as expressing it, moreover, in terms which do not admit of construction even by the subsequent writings or subsequent actings. Now, I do not think that the receipt granted upon the deposit is a document which at all necessarily expresses the terms of the deposit. It may do so, but on the other hand it may not. The contract of deposit may lie behind the receipt altogether. It may have been concluded by a formal deed, or by missives, or by correspondence, of Scotland. No. 4. Oct. 24, 1890. The pursuer reclaimed, and argued ;-The terms of the receipts were such as to exclude the right of retention which the bank would otherwise or even by verbal agreement, and the receipt may in such cases be merely executive of the contract, and of little or no importance even for purposes of construction. Or the receipt may be one of several sources from which the terms of the contract fall to be gathered. For example, it may fall to be read simply as a letter in a correspondence, or as a letter or telegram passing in the course of communications partly written and partly verbal. It is certainly not a document which is at all in the position of a formal deed. And the contract of deposit being always a consensual contract, capable of being constituted verbally and proved by parole, I confess I see no reason why, in a case like the present, the whole communications between the parties should not be considered, and the true terms of the contract ascertained. "In this view I think it is quite legitimate to look at the evidence which has been adduced by the bank, which evidence consists partly of the testimony of Mr Guthrie, the bank's agent in Brechin, partly of certain correspondence passing between that gentleman and the late Mr Robertson, and partly of Mr Robertson's bank account, a copy of which, taken from the bank's books, is produced. "Mr Guthrie's evidence, if accepted, appears conclusive. I do not suppose that can be disputed. His statement is that Mr Robertson's account being, in November 1887, overdrawn, he (Mr Guthrie) suggested a deposit of bonds, or rather a deposit of additional bonds, by way of cover, and that Mr Robertson at once agreed to this; and the deposit first mentioned on record was arranged and made expressly for the purpose of covering the then overdraft. He says further, that the deposit having been thus arranged and made, the receipt granted was expressed as for safe keeping, in the same terms as previous receipts, because both he and Mr Robertson considered, rightly or wrongly, that those terms were quite consistent with the bank's lien, which lien it was the expressed object of both of them to bring into force. He says, further, that Mr Robertson was allowed further credit in respect of the increased cover thus obtained; and that the two subsequent deposits mentioned on record-both made in April 1888, were arranged in the same way, and were followed by similar extended credits. In short, if Mr Guthrie's evidence is to be accepted, there was in the case of each deposit an express agreement that the bank should have a lien over the bonds deposited for their general balance. "The question, however, is, whether Mr Guthrie's evidence is sufficiently corroborated. For, entirely as I believe his statement, he is certainly in the position of a party, and perhaps a deeply interested party; and I should have at least hesitated to accept his unsupported testimony as against the prima facie import of the three receipts. But I am glad to be relieved from considering that question, because I am of opinion that Mr Guthrie is amply corroborated not only by the bank account, which, so far as it goes, supports his statement, but also by the correspondence which passed between him and Mr Robertson and Mr Robertson's son- Mr George Robertson-Chaplin. I incline to think that the terms of the contract in which the first deposit (that of November 1887) was made are sufficiently ascertained, apart from the parole evidence altogether, by Mr Guthrie's letter to Mr Robertson-Chaplin of 4th November 1887, and Mr Robertson's postscript to his letter of 19th November 1887; and I think that the bank's view of the several transactions is also borne out and illustrated by, inter alia, Mr Guthrie's letter of 1st June 1888, Mr Robertson's letter (no date), No. 47, and Mr Guthrie's letters to Mr Robertson-Chaplin of 12th June 1888 and 31st July 1888. These letters I think shew pretty conclusively that throughout the communications Mr Guthrie, Mr Robertson, and his son Mr George Robertson-Chaplin (who lived with him and acted for him), recognised that the bonds held by the bank were subject to the bank's general lien; and that, when additional credit was required, further bonds required to be lodged. "I therefore hold that Mr Guthrie's account of the matter is sufficiently corroborated; and, in these circumstances, it is not necessary to consider how far, if the contract had been constituted by the receipts and the receipts alone, No. 4. Robertson's have had. It might be that the words "for safe keeping on your account" were not sufficient to exclude the right, but the addition of the words. "subject to your order" made it clear what the purpose of the deposit Oct. 24, 1890. was, and that the depositor was to retain his control over the bonds. Trustee v. These words were equivalent to "returnable on demand." It was not as Royal Bank bankers that the defenders received the bonds; they were given to them of Scotland. for custody only, and to be put into their safe, and not like bills for collection or to be discounted. The case was one of proper deposit, which, being of a confidential character, would not ground retention. Where, as here, the receipt fully expressed the contract it was not legitimate to appeal to parole evidence outside it. It was only where the receipt was silent as to the terms of the contract that parole was available to clear it up. It was true that the bank collected the interest coupons, and that that part of the contract was not expressed in the receipt. But such an arrangement was not inconsistent with the contract as expressed in the receipt. The other evidence which it was proposed to introduce was inconsistent with the terms of the contract, and was inadmissible. The case could not be illustrated by the law of retention in bankruptcy. There the debt must arise out of the contract in the execution of which the deposit of the documents which it was sought to retain took place.3 Further, there were no cases where that doctrine had been carried so far as in the cases of Meikle and Robertson, and it was doubtful how far they were sound law. The doctrine of balancing accounts in bankruptcy did not go the length of including incorporeal moveables, unless in cases where there was a general lien.* 5 Argued for the respondents :-It was well-established that bankers had a right of retention for an unsecured balance over unappropriated paper securities in their hands. There was an onus on the pursuer here to shew a special contract taking it out of the general rule. The securities in the case of Brundao were Exchequer bills, which were kept by the bank in a box of which their customer had the key, so that the bank was not so much the custodier of the securities as of the box. But it was not disputed that the bills were held by the bank in their capacity as bankers. The terms of the receipts in the present case did not conflict with the general right of lien which the bank had, and merely expressed what would have been implied if nothing had been said. The bonds were the subsequent correspondence and subsequent actings of parties would have sufficed to construe the receipts in a manner favourable to the bank. It is not, however, to be overlooked that the actings of parties make it at least plain that the deposits in question were in no view deposits for safe keeping merely. That is to say, it is clear upon the proof that, although not expressed in the receipts, it was a part of the arrangement between the parties that the bank should undertake to collect the coupon interest as it fell due and to put it to the credit of Mr Robertson's account. That at least goes to shew that the receipts did not express the full contract between the parties. "On the whole, therefore, I conclude, as I said at the outset, that the bank have established their lien, and that they are entitled to absolvitor, with expenses." Brundao v. Barnett, 1846, 12 Clark and Finelly, H. L. Reps. 787, Lord Campbell, p. 808. 2 Bell's Princ. 211, 1414; Bell's Comms. ii. (5th edn.), 93, 119; Erskine, iii. 1, 26. 3 Meikle & Wilson v. Pollard, Nov. 6, 1880, 8 R. 69; Robertson v. Ross, Nov. 17, 1887, 15 R. 67. Strong v. Philips & Co., March 16, 1878, 5 R. 770; Anderson's Trustees v. Fleming, March 18, 1871,9 Macph. 718, 43 Scot. Jur. 373; Distillers Co., Limited, v. Russell's Trustee, Feb. 9, 1889, 16 R. 479, Lord Shand's opinion, p. 491. Bell's Comms. (5th edn.) ii. 118, (7th edn.) ii. 114. No. 4. Oct. 24, 1890. of Scotland. transmissible by delivery under the statute, and by possession a formal title of property in them was acquired. An agreement for "safe keeping" was quite consistent with the bank's right of lien.' The written receipts did not embody the whole contract, and it was competent to look at the comRoyal Bank munications and actings of the parties in order to ascertain the true nature of the contract. Further, the collection of the half-yearly coupons was a matter outside the written contract, and shewed that the case was not one of proper deposit. Otherwise the bank would not have had power to cut off the coupons and draw the proceeds. Parole being admissible, the evidence of Mr Thomas Robertson-Chaplin (who was examined after the case came into the Inner-House) and of Mr Guthrie, the bank manager, was conclusive as to the intention of parties. Further, the correspondence between the value of the bonds deposited from time to time, and the amount of the overdrafts at the different periods pointed to an understanding that the former were cover for the latter. The delivery of these bonds was not the constitution of a contract of pledge or deposit, but of property, nor, in any event, could the mandate or trust of deposit subsist after the bankruptcy of the mandant.3 At advising, the LORD PRESIDENT.--This is an action at the instance of the trustee upon sequestrated estate of the late David Souter Robertson, which is brought for the purpose of compelling delivery of four City of Edinburgh bonds, which are specifically identified in the conclusion of the summons. The defence is embodied in the second plea in law for the defender, which is "The defenders, being entitled to retain the bonds sued for until payment of the debt due to them, should be assoilzied, with expenses." The Lord Ordinary has in effect sustained this plea and assoilzied the defenders. This is a plea of retention, and it appears to me that the ordinary rule and doctrine of retention is directly applicable to the settling of accounts between a banker and his customer whether in bankruptcy or in the case where the customer is still solvent. It is generally spoken of, particularly by Mr Bell in his Commentaries, as bankers' lien, but it seems to me to be simply the right of retention which is known to the common law and applicable to cases of this description. The question is whether it is applicable to the circumstances of the present case. The rule may be fairly defined as a general right to retain all unappropriated negotiable instruments belonging to the customer in the hands of the banker for securing his balance on general account. It cannot be doubted in the present case that there is a large balance due to the banker by the customer, and further, that the four bonds in question are in the possession of the banker. But it has been maintained by the pursuer that the bonds were lodged for a specific purpose and not in the usual course of business so as to constitute a security for a general balance. Of course the doctrine of retention to which I have referred is subject to this exception, that if a negotiable instrument is lodged with a banker for the purpose of securing payment of a particular debt, or for any specific purpose, then in that case the general rule does not apply, but on the other hand that specific purpose must be clearly ascertained, otherwise the general rule will prevail. * Edinburgh and Leith Agreement Act (1 and 2 Vict. cap. 55), secs. 44 and 45. 1 In re United Service Co., 1870, L. R., 6 Chanc. Apps. 212. 2 Hamilton v. Western Bank of Scotland, Dec. 13, 1856, 19 D. 152, 29 Scot. Jur. 77, explained in National Bank v. Forbes, Dec. 1858, 21 D. 79, L. J.-C. Inglis, p. 86. 3 Bell's Comms. (5th edn.) ii. 129, (7th edn.) ii. 123, and Murray's Creditors v. Chalmers, 1744, M. 2626, there cited. a No. 4. Oct. 24, 1890. The only evidence on which the pursuer relies as indicating the specific appropriation of the bonds in the present case is to be found in the terms of the receipts granted by the agent of the bank at Brechin, when the bonds were Robertson's handed to him on 25th November 1887, 12th April 1888, and 27th April 1888, Trustee v. Royal Bank and the receipts are all substantially in the same terms. The first of these receipts of Scotland. is in the following terms-" We hold for safe keeping on your account, and subject to your order, City of Edinburgh annuity bond .. for the payment annually of £105 with coupons attached, £52, 10s. each, payable half-yearly on 1st February and 1st August. The words which are particularly relied upon by the pursuer are "for safe keeping on your account, and subject to your order." The terms of the document are not "for safe keeping only" or "exclusively," but "for safe keeping on your account and subject to your order." I think it I think it may be very fairly assumed that, when a customer of a bank deposits negotiable instrument with his bankers, one object which he has in view is the safe custody of the document, because a bank has means of keeping such paper securities more safely than the customer can. The bank has safes on their premises, which private individuals have not, and by depositing with the bank the customer gains the advantage of much safer keeping. We may, therefore, reasonably infer that the object for which the bonds were handed to the bank partly was to place them in safer custody than he could himself command. This purpose has a still more special significance because of the nature of the documents deposited. The bonds are transmissible by mere delivery from hand to hand and the interest coupons are payable to the person who presents them for payment when they fall due. They are documents which it is particularly easy to negotiate and they afford the most handy and available security to a banker. So long as the customer's account remains in a wholesome condition, I think the receipt very fairly expresses the relation of the parties, because if there is no overdraft then the object in handing the bonds to the bank was only that of "safe keeping on your account and subject to your order," and it was in the power of the customer at any time to demand redelivery. But if it were intended by Mr Robertson, the depositor, that the bonds in question should be specifically appropriated, we should have expected that this would have been more distinctly set out in the receipt. The presumption is that custody gives a right of retention, and I think that that presumption cannot be rebutted without something express and distinct. The evidence otherwise is entirely in favour of the defenders. The Lord Ordinary has dealt with the case as if it lay upon the defenders to remove the presumption which is created by the terms of the receipt. I confess I can hardly go along with his Lordship in this view, because I do not think that the terms of the receipts remove the original presumption caused by the custody of the bonds. With that reservation, I agree entirely with his Lordship as to the import of the evidence. One point to which I attach the highest importance, and which indeed by itself appears to me to be quite conclusive, arises upon the face of the bank account and the vouchers, which have been produced. On each occasion on which a bond was handed to the bank, the customer was desirous of making an overdraft or an additional overdraft upon his account,—and the overdraft which he proposed to make was quite understood by the parties to amount to a certain definite sum. If we look to the state of the bank account and of the vouchers, we find that at the same time as the overdraft was obtained there was deposited with the bank a City of Edinburgh bend of such an amount as precisely to cover the amount of the overdraft. B On |