Scottish Court of Session Decisions

The right to demand an assignation rests entirely upon considerations of equity as to the position of parties. A discharge is all that, in strict law, can be demanded; but where an assignation in favour of a third party who advances the money necessary to pay the debt, while it benefits the debtor, does no harm to the creditor, and the creditor is insisting upon implement of his obligation, the Court will intervene in the debtor's favour. The same considerations of equity which cause the strict law to be varied in favour of the debtor, precludes its application in cases where the creditor would suffer injury. A creditor receiving payment of his debt is not held to be under any obligation to assign, if the assignation shall be to his prejudice. He cannot, of course, be called upon by a debtor who himself pays his debt, to grant any such deed.

The demand for an assignation here is met by two answers. In the first place, it is urged upon us that the trustee is truly no more than a representative of the debtor, and reference is made to the case of Ewart and Latta, and to the opinion of Lord Westbury, who says in that case, that the trustee can maintain no higher ground in reference to his demand than the debtor himself could do.

The trustee does no doubt represent the bankrupt in a certain sense, but he is, in virtue of his confirmation, an adjudging creditor. The right of all adjudger in implement, and the right of an adjudger for debt, warrant legal reversion. He is administrator of the estate for the interest of all the creditors, and an assignation would plainly be an auxiliary in his administration. In the case of Latta, the observation of Lord Westbury was made in reference to a state of the fact in which a trustee claimed an assignation on payment, not of the debt due, but of 7s. 6d. in the pound of that debt. The assignation was offered by the creditor if his whole debt was paid; the argument was, that the debtor could not, on payment of 7s. 6d. in the pound, have asked an assignation; and a trustee could not exercise a privilege in reference to a partial payment. I do not think that this objection is good.

The creditor farther pleads that he has a second debt and security, and that the assignation of his right to the first security will prejudice his remedies under that security. Had that security been held by the creditor anterior to the sequestration, I should have been disposed to think the objection valid. It would present some difficulty if the acquisition had been made subsequent to the sequestration. It seems to me to present none at all, seeing that it was acquired after the application was made for entry into possession, and simultaneously with an order for condescendence. It is, I think, impossible for us to hold that a party can plead against a demand judicially made—a prejudice arising from the voluntary acquisition of the debt, in reference to which debt so acquired prejudice is averred pending the litigation. The only prejudice which he can plead as to this debt, and the circumstances of its acquisition, seem to me to exclude all equity in reference to it. To the equitable demand of the trustee he must show counter-equity, and if all the equity which he can urge is the effect to be produced upon a debt to which he had no right until the judicial demand for an assignation was made and actually under discussion, I cannot see that he presents any case for our equitable interference. I do not think that he can be heard to plead prejudice to a right only acquired plainly for the very object of raising the plea. I therefore agree with the Lord Ordinary, with whose views, as expressed in his note, I generally concur.

The other Judges concurred.

The interlocutor of the Lord Ordinary was accordingly adhered to.