Scottish Court of Session Decisions

P. & R. Wyper, coalmasters at Motherwell, brought this action against Harrison Carr & Company, coal merchants in Newcastle, for the price of two cargoes of coal delivered to the defenders by Prank Lindsay, merchant and shipbroker, of Leith, who was, the pursuers alleged, their authorised and accredited agent. When the account for the coals was rendered to the defenders by the pursuers, they refused payment, on the ground that they had purchased direct from Lindsay, and were not indebted to the pursuer, denying that Lindsay either was or was reputed to be agent for the pursuers. Lindsay's estates were sequestrated in April 1874, and the pursuers on raising this action used arrestments in the hands of his trustee, in order to found jurisdiction against the defenders. The defenders alleged that at the date of the arrestment they had no claim against Lindsay's estate, and their first plea in law was, “No jurisdiction, in respect that the arrestments used have not attached any funds of the defenders in Scotland.” The Lord Ordinary allowed the pursuers a proof of their averment that funds were attached by the arrestments, and to the defenders a conjunct probation. The trustee on Lindsay's bankrupt estate was examined, and gave this account of his position—“All the assets that Mr Lindsay left were his office furniture, which was sold and realised about £50. I do not think that after paying the rent there will be as much left as pay the expenses of the sequestration. There are no funds for division amongst the creditors.” It further appeared from the proof that the defenders paid Lindsay for the coals.

The Lord Ordinary pronounced the following interlocutor and note:—

“ Edinburgh, 6 th July 1876.—Having heard counsel and considered the cause, Finds that by the arrestments used by the pursuers the defenders have become liable to the jurisdiction of the Court in the present action: Repels the defenders' first plea-in-law, and finds them liable in expenses since the record was closed, and remits the account thereof when lodged to the Auditor to tax, and to report.

“ Note.—The evidence appears to me to show that the defenders have a contingent claim against the bankrupt estate of Mr Lindsay, merchant and shipowner in Leith, which would entitle them to have dividends laid aside under the Bankrupt Statute in any division of the estate, and which they would be entitled to have made the subjects of a valuation under the 53d section of the statute.

“The bankrupt in January of this year sent to the defenders two cargoes of coals, one by the ‘Ariel’ of the value of £228, and another by the ‘Dwina’ of the value of £149. If it be assumed that the parties who supplied these coals became creditors to Lindsay only, and not to the defenders, the defenders would be debtors to the bankrupt estate. But the pursuers maintain that Lindsay acted as an agent only, and that the defenders are their debtors, and the parties who supplied the ‘Ariel's’ cargo have intimated a similar claim, although they have not followed it up by raising an action. It is clear that if either of these claims be well founded, the defenders, who paid Lindsay for the cargoes, would have a claim for repayment. They are therefore, I think, entitled now to claim the values of the cargoes in the sequestration, to the effect of having dividends set aside to meet the contingency of the shippers establishing direct liability against them. Their own view is that they must be guaranteed against any claims by the shippers of the cargoes before they can come to any settlement with Lindsay's trustee. In this state of matters I am of opinion that the defenders have an interest in the bankrupt estate which is arrestable, and which having been arrested is sufficient to found jurisdiction. Lindsay v. North-Western Railway Co., 22 D. 571, and Douglas v. Jones, there cited, 9 S. 856.

“It was maintained that even though there might be an arrestable interest in the case of a contingent claim where there was obviously a fund for division, this would not apply to the present case, as the trustee has been unable to realise any estate. I do not think, however, that in a question of this kind the Court can enter on an inquiry as to the probability of a bankrupt estate yielding dividends or not. Estate may yet be discovered; the bankrupt may acquire a succession, or he may succeed in acquiring property in business which he would be bound to make over to his trustee, and these considerations are, I think, sufficient to meet the argument founded on the peculiar circumstances of Lindsay's estate.”.

The defenders reclaimed, and argued—There is no arrestment of a subject sufficient to found jurisdiction; indeed it has been proved that there is nothing at all to arrest here. Now, there is no case where an arrestment has been found effectual except where there are funds in hand or a debt due. The case that goes furthest is the case of Lindsay (quoted by the Lord Ordinary), but there the stock of the Caledonian Railway Company, which was arrested in their hands, was held to be an asset. In Shaw's case, where an opinion was indicated, the trifling sum of £1, 16s. 8d. was sufficient; there was this specialty, that the action was one in rem. The defender was a disponer of Scotch property, and the action concluding for reduction of the conveyance was necessarily brought in foro rei sitœ. In the case of Douglas v. Jones there was a question as to the assets of a partnership; but it was quite ascertained that although these might not be equal to meet the liabilities, still they did exist. Here, on the other hand, if this arrestment is sustained it is perfectly certain that the trustee will have nothing for creditors. And as the existence of any claim by Harrison Carr & Co. on the estate of the bankrupt is contingent on the result of this case, there is as yet at least nothing in the trustee's hands to arrest.

The respondents argued—It is sufficient that, there was between the arrestee and the defenders the relation of debtor and creditor. The Court cannot consider what dividend the estate will pay.

Page: 301↓

Besides, even if there be nothing at present in the trustee's hands, there is a presumption while the sequestration lasts that something may be acquired that will enable the trustee to account.

Cases quoted— Douglas v. Jones, 9 Shaw 856, and in the Faculty Collection, 30th June 1831 (the latter said by the Lord President to be much the more correct report); Lindsay v. London and North-Western Railway Company, 22d January 1860, 22 Dunlop 571; and Shaw v. Dobbie, 2d February 1869, 7 Macph. 449.

At advising—