Scottish Court of Session Decisions

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URL: http://www.bailii.org/scot/cases/ScotCS/1868/05SLR0503.html
Cite as: [1868] SLR 5_503, [1868] ScotLR 5_503

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SCOTTISH_SLR_Court_of_Session

Page: 503↓

Court of Session Inner House First Division.

Tuesday, May 19. 1868.

5 SLR 503

Paterson

v.

Barclay.

Subject_1Charge on Bill
Subject_2Suspension
Subject_3Trust-Deed for Creditors
Subject_4Bankrupt.
Facts:

Terms of trust-deed for creditors which held not to bar a creditor, trustee on the estate, from diligence against the bankrupt.

Headnote:

For several years Barclay, a wholesale dealer, was in the habit of supplying Paterson with materials used by him in his business. Paterson got into difficulties, and in December 1867 executed a trust-deed in favour of Barclay. The deed conveyed only what then belonged to Paterson, and provided “that as the object of this deed is to effect a speedy distribution of my present means and effects among my creditors, without prejudice to their right to recover the balance of their claims by diligence against me, and any estate I may hereafter acquire, it is specially provided that my said creditors, or any of them, shall in no way, by their accession to these presents, or the claiming benefit under the same, be prevented or prejudiced from instituting any action, or using any diligence competent at their instance against me, or any property which I may hereafter acquire or become posfessed of, for payment of their debts so far as not satisfied by the property hereby conveyed, or against any person or persons bound with or for me in payment of any of the debts owing by me to them; but that, notwithstanding their accession hereto, or the claiming under the same, it shall be in their power, at any time they think fit, to use all manner of diligence, real and personal, against me and my said other estate, or against such co-obligants, for payment of the debts due to them, as may by law be competent.”

Barclay, in February 1868, charged Paterson on two bills, dated in May and June 1867, whereupon Paterson suspended and pleaded that the “complainer having executed in favour of the respondent the trust-deed above mentioned, and the latter having accepted of, and acceded to, the same, and having acted under it by collecting and discharging accounts due to the complainer, and selling off and realising the proceeds of the complainer's household furniture and effects, he is, in the circumstances stated, barred from resorting to summary diligence upon bills signed anterior to the date of the said trust-deed.”

Judgment:

The Lord Ordinary ( Mure) refused the note of suspension, adding this note:—“It is not without hesitation that the Lord Ordinary has refused this note. For it appears to him, as at present advised, that the clause in the trust-deed, relative to the reservation of diligence founded on by the respondent, when fairly construed, was intended to apply only to diligence for any balance that might be due after distribution of the effects made over to the trustee; and if, in this case, the respondent had allocated a dividend, under the powers given him by the trust-deed to that effect, of so much per pound on his own and the other claims, the Lord Ordinary would have been disposed to pass the note, even without caution, to the extent of the amount of the dividend effeiring to the bills charged on; because, to that extent the charge would, it is thought, have been bad, in respect that the dividend would have operated as the extinction of so much per pound on every pound of the bills; Balmanno, 24th Feb. 1826, 2 W. & S., p. 7. And had caution now been offered, the Lord Ordinary would also have been disposed to pass this note, in order that the precise amount due upon the bills might have been ascertained. But as there has not as yet been any allocation or declaration of a dividend, and there are bills produced tending ex facie to instruct that there may still be a balance due to the charger, after a dividend has been declared larger than the amount of the bills charged on, the Lord Ordinary, having regard to the terms of the reservation as to diligence in the trust-deed does not consider that he

Page: 504↓

would be warranted in passing the note, except upon caution in common form.”

The suspender reclaimed.

Black for reclaimer.

Gifford, for respondent, was not called on.

The Court unanimously adhered.

Solicitors: Agent for Complainer— L. Mackersy, W.S.

Agents for Respondent— Thomson, Dickson, & Shaw, W.S.

1868

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