Scottish Court of Session Decisions

Lord President—This is about the clearest case I ever saw. Under the provisions of the 90th and 91st sections of the Bankrupt Act, the Sheriff, on the application of the trustee, orders the examination of the law agent of the bankrupt. Now, how far the trustee may be entitled to proceed in the examination of the law agent must depend upon the circumstances of each case.

In this case the bankrupt, having in August 1865 succeeded to an estate, the value of which was £5000 and having not above £800 of debt, and there being no burden on the estate, he, on 25th June 1867, finds himself in such a state of insolvency that it is necessary to execute a trust-deed for behoof of his creditors. When the bankrupt was asked, on his examination, to give an account of his affairs, he said he kept no accounts, and had no books or papers to deliver to the respondent as trustee upon his estate.

It is in these circumstances mat the trustee examines Mr Rankin, under the provisions of the 90th section of the Bankrupt Act; and one of the first things he sees is, that on the 15th of August 1865, the time when the bankrupt succeeded to the property, Rankin had made up a state of debt for which he makes a charge in his business accounts, and the trustee says, I should like to see that state of accounts, because it will throw light on the circumstances of the bankrupt, and accordingly he asks Rankin to produce it. Rankin admits that the state was made up, and that he has such a state in his possession, but he declines to produce it. We are told that it is not a document relating to the bankrupt's affairs. That, I think, it is impossible to maintain. Then another, and the principal, reason assigned by the appellant for not producing it is, that having got a document on 27th February 1867 which discharges him of all his intromissions, he stands upon that, and refuses to produce anything prior to its date. I give no opinion with regard to the effect of this document, but I do not hesitate to say that upon its face it does not discharge Rankin. It contains no words of discharge whatever. I must say, however, it produces a very different impression on my mind. It creates a strong suspicion against Rankin with reference to his transactions with the bankrupt. It results in this, that at the date of this document the bankrupt undertook to pay to Rankin bills to the amount of £2139, and also to pay a business account to the amount of £198, amounting together to no less a sum than £2337. That is rather a startling sum. This document is founded on as shutting out all inquiry, and Mr Rankin appeals to this Court for protection. Before his examination began there was no reason to suspect anything against Mr Rankin. But his refusal to produce this document, and his account with the bankrupt, subjects him to the gravest suspicion. Therefore, in consequence of what he has done, the fullest and most searching inquiry must be demanded of his hand. The other plea, that the document and account called for do not relate to the bankrupt's affairs, is quite untenable. The documents are indispensable to the trustee.

Lord Deas—This is the clearest possible matter. What the appellant is called upon to produce is—(1) The adjusted state made out in August 1865; (2) the account-current between the appellant and the bankrupt; and (3) the appellant's books. He declines to produce the adjusted state and the accounts-current prior to a certain date on the same grounds—viz., that by the letter of authority of 27th February 1867 he is discharged of all intromissions, and therefore he says the production of these documents is unnecessary. He does not say that he will suffer the slightest prejudice. There is not a word about prejudice set forth even in his pleas in law. Now, is the appellant to be the judge whether the accounts called for are necessary or unnecessary? All that is asked is that the trustee may have an opportunity of seeing them. The effect to be given to the letter of authority is not at present to be judged of. Whatever had been the nature of this document, the result would have been the same. But when we look at it, it is plain that it does not operate as a discharge. It rather shows that there was to be a complicated accounting. But even though this letter could have been held to be a discharge, I am not prepared to say that the trustee would not have been entitled to see the accounts called for.

The only thing with regard to which there was room to say one word was as to the books. He refuses to produce these because they contain the accounts of other parties. Now I see no more reason for alarm as to that, in this case, more than in any other. Either the Sheriff or Sheriff-clerk can make the excerpts. The accounts of other parties are not to be seen by the trustee. The Sheriff won't allow anything to be excerpted except what has reference to transactions with the bankrupt's estate. He is not to judge of the effect to be given to the accounts. The appellant acted as the agent of the bankrupt, and he managed the whole of his money affairs. Is he then to be the judge of what part of his accounts he is to exhibit and what not? I think not, and I agree that this appeal must be dismissed.

Lord Ardmillan and Lord Kinloch concurred.