Scottish Court of Session Decisions

The question in this case arose out of the bankruptcy of John Ritchie, sole partner of the firm of Ritchie & Son, Leith. Mr Balgarnie was appointed agent on the sequestrated estate, and the complainer, who was the bankrupt's father, lodged a claim for a debt amounting to £406, 10s. 10d. vouched by two bills granted by the son and the bank cheques given to him by his father. On this claim the trustee pronounced the following deliverance:—“The trustee rejects this claim as not being sufficiently vouched, the claimant being the bankrupt's father, and therefore conjunct and confident with him: allows the claimant, however, eight days from this date to lodge any farther documents or evidence vouching or corroborating the whole or any part of such claim.” The creditor neither tendered farther evidence nor appealed against the trustee's deliverance within fifteen days, and the trustee proposed to pay to the other creditors a dividend of 9s. 8d. per pound, which, as was alleged, would exhaust the estate.

The complainer accordingly presented a note of suspension and interdict, praying the Court to “interdict, prohibit, and discharge the said respondent from paying over to any of the creditors of the said Ritchie & Company and John Ritchie any dividend out of the sequestrated estate of the said Ritchie & Company and John Ritchie on the 4th June current, or thereafter, until the respondent has had a proper opportunity to establish the claim lodged by him as a creditor on the said estate, and the said claim has been either admitted or rejected in terms of the Bankruptcy (Scotland) Act, 1856.”

The Lord Ordinary ( Young) pronounced the following interlocutor and opinion:—

“ Edinburgh, 13 th November 1874.—The Lord Ordinary having heard counsel for the parties, and considered the closed record: Repels the reasons of suspension: refuses the note of suspension and interdict, and decerns: finds the complainer liable in expenses, and remits the account when lodged to the Auditor to tax and report.”

Opinion—The question is, whether the complainer has stated sufficient grounds for suspending the proceedings of the respondent as trustee in the sequestration of Ritchie & Company, with a view to the first statutory dividend, and interdicting payment thereof. The complaint involves no disputed facts, but rests exclusively on the terms of the trustee's deliverance (quoted in stat. 4) upon the complainer's claim in the sequestration.

The peculiarity in the deliverance is, that after formally and in terms rejecting the claim, the trustee allows the claimant, however, eight days from this date, April 17, to lodge any further documents or evidence vouching or corroborating the whole or any part of such claim.’ The case turns on the effect of this peculiarity. I am unable to see clearly how the trustee, after rejecting the claim and declaring the first statutory dividend on that footing, could thereafter, with statutory regularity, of his own authority have admitted the claimant to the benefit of that dividend, had the claimant availed himself of the opportunity afforded him, to the effect of establishing his claim to the satisfaction of the trustee. At least I see difficulty in the way of such a proceeding, and know of no authority for it. But it was unnecessary to consider that matter, for the claimant was not in a condition to avail himself, and in fact did not avail himself, of the opportunity which the trustee indulgently (and with questionable regularity) afforded to him. He did not lodge ‘any further documents or evidence vouching or corroborating the whole or any part of such claim,’ within the eight days allowed to him for that purpose, or at any time thereafter. He does not allege now that he has any further documents or evidence; but only that, if allowed the opportunity of appealing, he may by argument satisfy the appellate tribunal that the documents and evidence which were before the trustee when he rejected the claim ought to have induced him to admit it. The purpose of this suspension is, in truth, to obtain for the complainer an opportunity of appealing against the judgment of the trustee after the lapse of the statutory period. But for this purpose I cannot, in the circumstances of the case, sustain it. I say in the circumstances of the case, because I think this Court has jurisdiction, which might be exercised by way of suspension, to afford relief to a claimant in a sequestration who had been misled to his prejudice by the form of the trustee's deliverance on his claim. But a party whose claim is rejected, subject to further documents or evidence within eight days, was put to the immediate consideration of the question whether or not he could lodge further documents or evidence, and if he determine that question in the negative, as the complainer did, I think he

Page: 209↓

ought to consider his claim as rejected so far as the judgment of the trustee goes, and act accordingly. The eight days allowed by the trustee was not for argument or debate on the documents before him, and on which he had rejected the claim, but to ‘lodge’ further documents if the claimant had any. I am therefore of opinion that the note of suspension should be refused, with expenses.”

The complainer reclaimed, and pleaded—“(1) The respondent having, by his deliverance upon the complainer's claim, allowed the complainer to produce further evidence in support of his claim, he was bound to consider the additional evidence which was submitted to him before finally rejecting the claim. (2) The respondent was not entitled to refuse to reconsider the complainer's claim on the ground that fifteen days had expired from the date of his deliverance of 17th April. (3) The respondent having throughout the proceedings misled the complainer as to his claim, and having intimated his intention to divide the whole estate among the creditors other than the complainer, the interdict craved ought to be granted. (4) The respondent's deliverance of 17th April being unwarranted and unauthorised by the Bankruptcy Statute, he is not entitled to plead its finality, and the complainer should now be allowed an opportunity of proving his claim.”

Argued for him—He was only bound to appeal against the trustee's deliverance if it were a statutory rejection, but this was not. The trustee rejected the claim and at the same time allowed further evidence of it. Under the Act 1621 the creditor was entitled to support his claim by parole evidence.

Authority— Scobie v. Hill's Trustees, 23d Nov. 1869, 8 Macph. 161.

The respondent pleaded—“(1) No appeal having been presented against the respondent's deliverance on the complainer's claim within fifteen days from the date of the publication in the Gazette of the said notice, the same became final and conclusive in so far as regards the dividend the payment of which is sought to be interdicted. (2) The respondent was entitled, while rejecting the complainer's claim as not sufficiently vouched by the evidence then produced, to allow the complainer an opportunity of adding further evidence, and the said deliverance was competently pronounced in terms of the said statute. (3) The said deliverance was a valid and competent rejection of the said claim, notwithstanding the allowance therein of further evidence, and became final and conclusive on the expiration of fifteen days from the date of the said notice. (4) In any event, the complainer not having taken advantage of the opportunity allowed him to produce further evidence within the time specified by the respondent, the rejection of the said claim contained in the said deliverance then became absolute and final; and no appeal having been presented against the deliverance, the same is now final and conclusive. (6) The complainer's claim having been finally and conclusively rejected, he is not entitled to interdict or interfere with the payment of the dividend. (6) The grounds of suspension stated by the complainer being unfounded in fact and untenable in law, the note ought to be refused, with expenses.”

Argued for him—The trustee rejected the claim as it stood, but did not preclude himself from reconsidering the matter in case he got further evidence. The deliverance had now become final because the complainer did nothing within fifteen days of the gazette notice. If the allowance of the eight days was out of the trustee's power, it was simply surplusage, and did not affect the validity or finality of the deliverance. (1) The deliverance was literally in compliance with the statute, because it was a rejection of the claim. (2) It was substantially in compliance with the statute as being a rejection though conditional. (3) It was not a deviation from the statute, as it prejudiced nobody.

At advising—