Scottish Court of Session Decisions

The Lord President said—This firm of Campbell Brothers was sequestrated in May last; and in November last, just six months after the sequestration, the petitioner, John Campbell, applied for his discharge; and after the usual preliminary proceedings, the Sheriff-Substitute, on 2d January lest, found him entitled to his discharge, and appointed him to appear and make a declaration in terms of the statute. Now, the petitioner required. in terms of section 146, to lay before the Sheriff-Substitute a report by the trustee in the sequestration, and the first objection stated by the appellants is that the trustee's report is not in terms of the Act of Parliament. I am not prepared to sustain that objection. The report is not just what it should be, but I don't think it is so far a departure from the statute as to induce me to refuse the discharge on that ground. I think the true form in which such a report ought to be framed is an expression of the trustee's judgment in the matter after making the fullest inquiry. I don't think it is sufficient for him to say that he “believes” a thing to be so and so, or that it is so “so far as known” to him. I think he ought to make himself master of the subject and express his opinion. But I am rather inclined to proceed on the second objection—that the report is not well founded when it says that the bankruptcy arose from innocent misfortune. There are a few facts which it is important to keep in view. It appears that these brothers had been in business for some time prior to 1864, but is that year they became bankrupt, and settled with their creditors by a composition. Their liabilities then were £60.000, and they undertook to pay a composition of 5s. a pound. I presume that the instalments of that composition were only in course of being paid when the second sequestration took place; but this is clear, at all events, that when they started the second time they did so with borrowed capital. They came down again last year with enormous liabilities as compared with their assets. It is quite true that, so far as the London house is concerned, the assets and liabilities look more favourable, and I am willing to believe John Campbell when he says that the London house was solvent. But in Glasgow the position of the firm was quite the reverse. Now, if John Campbell, living in London and managing only the London business, and having no knowledge of the kind of business going on in Glasgow, only became involved through the misconduct of his brother, of which he had no knowledge, he might be entitled to his discharge;but the question is whether he was in that state of innocent ignorance. Prima facie, I think it highly improbable that he was; but I further think there is pretty conclusive evidence of the contrary. What, then, was going on in Glasgow? It was about as reckless speculation as any merchant could possibsly engage in, and the correspondence between the brothers discloses this to my mind, that John Campbell was perfectly aware of the nature of the speculations in which his brother David was engaged as representing the house in Glasgow. I do not say he knew their amount, but he knew that they were of very large amount, and he also knew this, that his brother was enabled to carry on his speculations by means of assistance derived from his father, which assistance I will not characterise farther than by saying that it was illegitimate. and a betrayal of his employer's trust. On these grounds, I think the Sheriff Substitute ought to have refused this discharge. The petition may be renewed at a greater distance of time and under more favourable circumstances, but at present it cannot be entertained.

Lords Curriehill and Ardmillan concurred.

Lord Deas declined, being a shareholder of the Commercial Bank.