Subject_1 COMPENSATION - RETENTION. Subject_2 SECT. XV.
Concursus Debiti et Crediti.
Richard Hotchkis, Trustee for the Creditors of Adam Keir, v. The Royal Bank of Scotland
Date: 28 February 1797 Case No. No 135.
The Royal Bank of Scotland was found entitled to retain the stock of an insolvent proprietor, for payment of debts due to the Bank, by a company of which he was a partner.
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Bertram, Gardner and Company became bankrupt, deeply indebted to the Royal Bank of Scotland.
Adam Keir, one of the partners of the Company, held L. 2000 of the stock of the Bank, who, in terms of a by-law passed in 1728, refused to allow it to be transferred to the Trustee for the creditors, till security was found for payment of the debt due by the Company to the Bank.
Upon this, Richard Hotchkis, the trustee, brought an action against the Bank, to compel them to transfer the stock, in which he
Pleaded; By 5th Geo. I. c. 20. the public creditors of Scotland were incorporated under the name of the Equivalent Company, and their stock, (for payment of the interest of which an annuity was funded,) was made transmissible by a transfer in the books of the Company, § 6.
In 1727, a charter was granted, allowing such of the members as should choose it, to subscribe their stock, and carry on the trade of banking, under the name of the Royal Bank of Scotland, with authority to make calls, not exceeding L. 50 per cent. on the sum subscribed.
By the original, and all the subsequent charters to the Bank, it is declared, that the shares “shall not be liable to any arrestment or attachment that shall be laid thereupon, by any law, custom, or usage to the contrary notwithstanding.” And the shares are made transferable, as in the original Company, with these exceptions, that the Directors may prohibit a transfer, while the proprietor has not paid up the calls on his subscribed capital, and that they may retain dividends both in this case, and when fines have been incurred, imposed in consequence of by-laws, a power to make which, so far as consistent with the public law, is expressly given.
But the by-law in question was ultra vires of the Bank. The proprietors of the stock of a public incorporated company have a definite interest in their shares very different from the right of a partner in a private company, which extends only to the balance remaining after the debts of the company are discharged, and the right of retention competent to the latter society is excluded in the former; Equity Cases Abridged, v. 1. p. 8. 1728, Assignees of Beck against the Royal Assurance Company. If it had been understood that the Bank had a right of retention at common law, there would have been no occasion for giving it in the two particular instances above-mentioned; and as legal diligence is excluded, a fortiori must the private right of retention.
Answered; There is no difference at common law, as to the question of retention, between the shares of incorporated and other societies.
The charters of the Bank were meant to introduce exceptions from the common law in its favour, and nothing short of an express enactment could exclude it from the right of retention competent to every private society. The two cases in which it is expressly given were mentioned merely ob majorem cautelam; and the clause excluding diligence applies only to third parties.
The by-law passed in 1728, has been uniformly enforced.
The Lord Ordinary reported the cause on informations.
It was observed, that the by-law in question was merely corroborative of the common law.
The Lords unanimously ‘assoilzied the defenders.’
A reclaiming petition was (11th March) refused, without answers.
Reporter, Lord Methven.Act. Jo. Clerk.Alt. H. Erskine.Clerk, Sinclair.
Fac. Col. No 19. p. 42.
*** Two other cases, in similar circumstances, were decided in the same manner.
