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Cite as: [1870] SLR 7_376, [1870] ScotLR 7_376

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SCOTTISH_SLR_Court_of_Session

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Court of Session Inner House First Division.

Friday, March 5 1870.

7 SLR 376

Wiseman

v.

Skene.

Subject_1Bankruptcy Act, 19 and 20 Vict., c. 79, §§ 70–74 — Sequestration — Trustee — Vote — Claim — Open Account.
Facts:

At a meeting of creditors under the Bankrupt Act 1856, one of the competitors for the office of trustee had an apparent majority in his favour, and the caution offered was declared satisfactory by the meeting. The supporters of the other competitor, who had not offered caution and had withdrawn from his candidature, appealed to the Sheriff. The decision of the Sheriff, who, on a scrutiny, disallowed a vote founded on an open account containing items “for services, oil paintings,” &c., presented by the brother of bankrupt; and found that there had been a real majority at the meeting in favour of the candidate who had since withdrawn, and accordingly appointed a new meeting for the election of a trustee— sustained.

Headnote:

In obedience to a deliverance of the Sheriff of Edinburgh, dated 11th January 1870, whereby he sequestrated the whole estates and effects of John Cumming, photographer, Edinburgh, the creditors assembled on 21st January to elect a trustee and commissioners. On a division, creditors with claims to the amount of £605,11s. 5d., voted for Mr Dall, C.A., while creditors with alleged claims amounting to £1221, 9s. 1d., voted for Mr Wiseman, accountant, leaving an apparent majority in his favour of £615, 17s. 7d. Those creditors who had voted for Mr Dall protested against the validity of the votes given for Mr Wiseman. The meeting fixed £100 as the amount of caution to be found by the trustee, and declared themselves satisfied with the person proposed as cautioner for Mr Wiseman. They then proceeded to elect commissioners in terms of the statute. Mr Dall having declined to act, the dissentients appealed to the Sheriff ( Hallard), who on 9th February pronounced an interlocutor, finding “that the said John Wiseman was not supported by a majority of valid votes, and therefore declines to confirm him as trustee foresaid; and in respect that the said John Wiseman's competitor for that said office, Thomas Dall, is not a party to the present proceedings, and cannot therefore be appointed trustee foresaid, appoints the creditors of the said John Cumming to meet of new for the purpose of electing a trustee, and trustees in succession, and commissioners, in terms of the statute.”

He appended the following Note:—“This case presents the unusual feature of a candidate for the office of trustee with an apparent majority of creditors on the one side; and on the other side the apparent minority who opposed his election, but whose own candidate declines to litigate the question.
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The Sheriff-Substitute's first impression was that, there being now no competition in the proper sense of the word, the candidate of the apparent majority must prevail, subject to the powers of removal conferred upon creditors by the 74th section of the statute. But, on further consideration, the true course seems to be to take up this competition as usual, with the result of confirming the candidate of the apparent majority, if the votes recorded in his favour could successfully stand examination, and of ordering a new election in the opposite event of a victory won by the apparent minority litigating without a candidate. At the meeting for the election of trustee the apparent majority of the creditors supported John Wiseman; the apparent minority voted for Thomas Dall. Each side declared its own candidate duly elected, with the customary protest against the validity of the votes tendered for the opponent. A cautioner was proposed by John Wiseman. No cautioner was proposed for Thomas Dall. In these circumstances the Sheriff-Substitute has sustained the title of William F. Skene and others, creditors supporting Thomas Dall, to contest the validity of the votes recorded in favour of John Wiseman. The first objection stated by these creditors was to the vote of Gilbert Cuinming, a brother of the bankrupt. This vote is upon a claim for £817, 7s. At the division the apparent majority was £1221, 9s. 1d. for Wiseman as against £605,11s. 5d. for Dall. Consequently, if deduction be made for this vote as invalid, the majority would be the other way. The claim annexed to the affidavit is stated in the usual form of a tradesman's account. But in substance it represents a series of disconnected transactions, some of which are of considerable amount. One of the items, the largest, presents a manifest incongruity with the rest. It consists of a sum of £382 as wages due to the claimant by the bankrupt for ‘ services.’ Of this claim, even if well founded, a large portion is extinguished by prescription. But it seems quite clear that this is not a statement of debt entitled to the privileges of an ordinary tradesman's account. It was justly contended at the discussion that a claimant cannot escape the statutory obligation of producing vouchers merely by putting his claim in that shape. No voucher whatever has been produced. This objection is abundantly strengthened by two considerations. One is, that the claimant is conjunct and confident with the bankrupt. The other is, that the bankrupt in 1868 executed a trust-deed for behoof of creditors whose names and claims are therein set forth in detail. The name of Gilbert Cumming and his claim of £817 do not appear in that list. On these grounds this vote was disallowed by the Sheriff-substitute. The majority being thus turned the other way, objections were stated to the votes for the nominee of William F. Skene and others.

As to Wilson, Burn & Gloag's claim for a professional account for £112, 13s. 9d., the objection is that this account has not been taxed. On this point the statute is silent; and no authority is produced for taxation as a preliminary to voting. The Sheriff-Substitute therefore does not feel justified in sustaining this objection. It is unnecessary to pursue any further this investigation of the votes. Even if Wiseman's remaining objections were all good, there is now an effectual majority against him. But as his opponent, Dall, is not in a position to be confirmed, a new election has been ordered.”

Wiseman appealed.

Brand, for him, argued—that the Sheriff should have given effect to the balance of Cumming's claim after deduction of the sum claimed for services; that it was no objection to the claim that it was made by the bankrupt's brother; Blyth, 4 S. 154; and that the creditors had no title to appear before the Sheriff without having a competing trustee who had complied with the terms of the statute. Their remedy being the removal of Wiseman under section 74 of the statute.

Gloag, in answer, argued—that the creditors dissenting had a right to appear before the Sheriff; Lord Wood's opinion in Bailey, 8 D. 18; Maefarlane, 29th January 1848, 10 D. 551; Cumming's claim was not of the nature of a tradesman's account; Kinnear v. Lowe, 14th November 1849, 12 D. 6.

At advising—

Judgment:

The Lord President said that there could be no question of the competency of this appeal. If the Sheriff had judicially declared some one to be elected as trustee, that judgment was final under section 71 of the statute. But the finalty under the statute was confined to such judgments. The next question was as to the title of the supporters of Mr Dall to appear before the Sheriff and object to the election of Mr Wiseman as trustee, although Mr Dall was no longer a competitor. He agreed entirely with the dictum, of Lord Wood in the case of Bailey, and thought that “the parties” in section 78, who are to appear before the Sheriff and enter into the scrutiny, were not the professional men proposed as trustees, but their supporters.

The turning point in the case was the claim of Gilbert Cumming, the brother of the bankrupt, because if it were disallowed there was no doubt that Mr Dall had a real majority. It was certain that open accounts were sufficient vouchers of debt to sustain a claim and give a vote at this stage, but they must be of such a nature as in the general case were the only vouchers which could be had; such as a tradesman's account for furnishings. It would be most unjust and inconsistent with the statute that tradesmen should be denied a right to vote for the election of a trustee who had nothing to show except their unpaid accounts. But this doctrine must not be extended to things which did not in the general case run into “open accounts.” In his opinion this was not an “open account” in the sense of the statute, it was merely an assemblage of items constituting a claim against the bankrupt. Nor was the suspicious nature of the claim to be left out of view. There had been a private trust in 1868, and the claim was not included in it although the claimant was the brother of the bankrupt.

In the circumstances, he thought the Sheriff had taken the right course in appointing a meeting to elect a trustee of new.

Lords Deas and Ardmillan concurred.

Lord Kinloch— I am of opinion that the Sheriff has rightly disposed of this case. The main question regards the effect due to the affidavit and claim made by Mr Gilbert Cumming in the sequestration of his brother. I would not throw the slightest doubt on the admissibility of open accounts, properly certified, to entitle the party in right of them to vote in the election of trustee. But alleged open accounts are, from their nature,

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not unlikely in supposable cases to be made the ground work of fraudulent claims.

It is easy to frame an ex facie open account which is entirely fraudulent. The Court have therefore rightly proceeded upon the principle, that what is called an open account must be a thing the good faith of which shall be fairly presumable. I think the account produced by Gilbert Cumming in the present case is a most suspicious document. The first item that strikes the eye is a sum of £382 odds, said to be due by his brother for services. Mr Brand very judiciously did not contend that this sum could be included in the claim; but that withdrawal does not alter the impression produced on my mind by this item of the account.

Another item is £94 for an oil painting, subject unnamed. One is left to surmise whether this is the work of an old master, or the modest value which Mr Cumming places upon his own production. So also of other items. On the whole, I am of opinion that this document is not such an open account as can give a vote in the election of trustee. It may entitle to draw a dividend when fully proved, but only then.

Counsel:

Agent for Pursuer— J. M. Stacey, S.S.C.

Agent for Defender— W. R. Garson, S.S.C.
1870