Scottish Court of Session Decisions

This was an application for recal of the sequestration of the estates of Smith, Mair, & Company, engineers in Glasgow, and John Mair a partner of that company. The sequestration was awarded by Lord Barcaple on 6th April 1868, on the petition of the respondent, Peter Dewar, a creditor. The other respondent, John Wight, was trustee in the sequestration.

Various pleas were stated on record in support of the application. It was said (1) that there was no proper citation of parties to the petition for sequestration; (2) that there was no evidence of notour bankruptcy produced to the Lord Ordinary; (3) that there was no estate belonging to Smith, Mair & Company which could be sequestrated: and (4) that the sequestration was unnecessary and inexpedient. The only plea now insisted in was the second.

It appeared that two persons, named Smith and Mair, had carried on business under the firm of Smith, Mair & Company prior to June 1867. In that month they were under the necessity of calling a meeting of their creditors, and an arrangement was made whereby the creditors agreed to accept payment of their debts by bills at 4, 8, and 12 months on the partners agreeing to place some additional capital in the business, and to carry it on under the supervision of a committee of the creditors. Shortly after this arrangement the partners agreed with each other for a dissolution of the copartnery, Smith obliging himself to pay Mair, in respect of his retiring, a sum of £1200, for which he granted bills. The business was thereafter carried on by Smith under the firm of John Smith & Company. On 2d January 1868 the estates of John Smith & Company, and of Smith as sole partner thereof, and also as a partner of the dissolved firm of Smith, Mair & Company were sequestrated on their own petition.

The respondent Peter Dewar was a creditor of Smith, Mair & Company, his ground of debt being a bill for £100, dated 27th April 1867, payable four months after date. This bill was duly protested, and on 30th December 1867, Smith, Mair, & Company, and John Mair, were charged to pay. The charge for the firm was left at their place of business, and that for Mair at his dwelling-house in Glasgow. The charge being expired, a warrant of imprisonment was issued against Mair on 6th January 1868, and on the same day he was searched for in his house, but could not be found. The officer's execution of search was produced.

The following averments were made by the petitioners, who were creditors of Smith, Mair & Company:—“From the date of the dissolution Mr Mair ceased to carry on any business in this country, having turned his attention to obtaining employment abroad. Accordingly, after some time he got the appointment of superintending engineer to the River Parana Steam Navigation Company, Buenos Ayres, South America, and on 22d December 1867 he sailed from the Clyde for South America for the purpose of entering upon the duties of that engagement, which is one of a permanent nature. Mr Mair had given up his house in Glasgow, and his wife went to live with her father in Edinburgh. Before leaving this country, he granted a mandate in favour of his brother, Mr William Mair, Tradeston Saw-mills, dated 18th December 1867, upon the narrative that he was about to go abroad. The fact of his having obtained this appointment, and gone abroad for the purpose of fulfilling it, was generally known in Glasgow, and, in particular, was known to the said Peter Dewar and his agents. Mr Mair had not fled or absconded from the diligence used by Mr Dewar on the said £100 bill,—that charge was given on 30th December 1867. Mr Mair had left this country before that date, openly and notoriously, for South America, to fulfil the duties of a permanent appointment there. He had not gone away in consequence of, or after the charge given on said bill. And that charge was not followed by his departure from this country, which departure preceded the charge, and was not occasioned either by that or any other charge or diligence. His absence from what had been his dwelling-house at the date of the execution of search did not imply his flight from the diligence upon the £100 bill, which was the only diligence produced or founded on in the petition for sequestration, by way of evidence of notour bankruptcy.”

The Lord Ordinary ( Kinloch) found that no sufficient ground had been shown for a recal of the sequestration, and therefore refused the petition with expenses. He added the following

“ Note—The sequestration sought to be recalled was issued of the estates of Smith, Mair & Co., and of John Mair, one of the partners thereof, as such partner, and as an individual, on 6th April 1868.

There had been another partner of the company, John Smith, who, after the dissolution of Smith, Mair & Co., had carried on business under the firm of John Smith & Co. On 2d January 1868 a sequestration had issued of the estates of this company, and of ‘John Smith, the sole partner thereof, as an individual, and also as partner of the dissolved firm of Smith, Mair & Co.’

Application is now made for recal of the sequestration of the first-mentioned firm of Smith, Mair & Co.; but, as appears to the Lord Ordinary, the grounds stated are insufficient.

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1. The leading plea maintained is, that Smith, Mair & Co., had not been legally made notour bankrupt. The mode adopted was to raise diligence on a bill of Smith, Mair & Co. for £100, held by the respondent Peter Dewar; to give a charge on that bill to John Mair, one of the partners, by leaving a copy of the charge at his alleged dwelling-house in St George's Road, Glasgow, on 30th December 1867; and, on 6th January thereafter, executing a search for him under a warrant of imprisonment at the same dwelling-house. The objection stirred is, that on 22d December 1867, eight days before the date of the charge, Mr Mair had sailed for South America, in order, as is alleged, to take up the office of engineer under the River Parana Steam Navigation Company, ‘which,’ it is said, ‘is one of a permanent nature;’ and the effect of this, as is said, was to render the charge and execution of search at an alleged dwelling-house in Glasgow of no validity. The Lord Ordinary cannot accede to this view. It is not disputed that Mair was a domiciled Scotchman, nor that the house in question had been his dwelling-place in which he lived with his family. Nor is it distinctly said that he did not leave his family in the house when he went away, which the respondent alleges that he did. There are no circumstances averred leading to a necessary inference that his Scottish domicile was abandoned or lost. It appears to the Lord Ordinary that a charge given at his dwelling-house within eight days of his alleged departure, and an execution of search seven days after this, were competent legal proceedings, being gone through at what the law will hold the continuing dwelling-place of Mair; and that the objection to the bankruptcy is therefore groundless.

It was stated by the respondents, as a further answer to the objection, that Smith, the other partner, had, by his sequestration on 2d January 1868, become notour bankrupt ‘as partner of the dissolved firm of Smith, Mair & Co.,’ and that this was sufficient to sustain the sequestration of this last-mentioned firm on 6th April thereafter. The Lord Ordinary would have difficulty in holding this to be equivalent to making a partner notour bankrupt ‘for a company debt.’ He doubts whether the allusion to Smith, as a partner of Smith, Mair & Co., is of any further effect than a sequestration of his individual estates would have at any rate without any such allusion. But he thinks the other answer to the objection sufficient.

2. It was further objected to the sequestration that it had issued without sufficient citation to the company of Smith, Mair & Co., and its partners. But on looking to the executions of citation, the Lord Ordinary finds an amount of citation which may be well termed superabundant. There was a citation (1) to the company, by a copy being left within their last place of business; (2) another to the company, by delivery of a copy to Smith the partner on its behalf; (3) a citation to the partner, John Mair, by a copy being left at his dwelling-place aforesaid; (4) another citation to Mair, by a copy being left at the office of the Keeper of Edictal Citations, thereby meeting the contingency of his being held furth of the kingdom; (5) a citation to Smith, the other partner, by a copy being left for him with a servant within his dwelling-place. Add that John Smith appeared in Court to oppose the sequestration going out, and it was issued after hearing his opposition.

3. A third objection to the sequestration was laid on its alleged inexpediency, because it was said all the assets of Smith, Mair & Co. had, after the dissolution of that company, merged in the new company of John Smith & Co., and lay under the sequestration of the last-mentioned company, in which all the creditors of both firms may rank indiscriminately. The Lord Ordinary could not listen to this objection. Admittedly, there was a true and real company of Smith, Mair & Co., with creditors holding its unretired obligations. It was the privilege of any one of these creditors to have the company sequestrated. What amount of assets may be vindicated in order to form the sequestrated estate, is not a question hujus loci, or one on the discussion of which the validity of the sequestration can be made to turn.

This last-mentioned objection to the sequestration was stated by the partner Smith, when he appeared to object to the sequestration going out, and was then overruled.”

The petitioners reclaimed.

Dean of Faculty and Pattison, for them, argued—1. Notour bankruptcy is said here to have been constituted by a charge of payment and Mair's absconding. But under the Bankruptcy Statute, § 7, in order to constitute notour bankruptcy the absconding must follow the charge. Here it preceded it by eight days. 2. There was here no absconding. Mair went abroad to fulfil a contract of employment which he had entered into, and he did so not to avoid the respondent's diligence, but some days before it was commenced. The petitioners are entitled to a proof of their averments.

Solicitor-General and Bubnet in reply:—1. Although the absconding commenced before the diligence, the charge was followed by a continuance of it, and this constituted notour bankruptcy. 2. The execution of search afforded apresumptio juris in the question of absconding, and although this presumption might be rebutted, the petitioners' statements were not relevant for that purpose, and should not be admitted to probation. At the time Mair left he was in a state of hopeless insolvency, and he left the country, no matter with what view, without making any provision for payment of his debts.

The following authorities were cited—2 Bell's Comm., pp. 172–3–4; Davidson, M. 1092; Finlays, M. 1106; Carron Company, M. 1110; Ross, M. 1111; Young, M. 1112; Spedding, M. 1113.

The Court adhered.

At advising—