Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> City of Glasgow Bank Liquidation - (Alexander Mitchell's Case) Alexander Mitchell v. The Liquidators [1878] ScotLR 16_165 (21 December 1878)
URL: http://www.bailii.org/scot/cases/ScotCS/1878/16SLR0165.html
Cite as: [1878] SLR 16_165, [1878] ScotLR 16_165

[New search] [Contents list] [Printable PDF version] [Help]

SCOTTISH_SLR_Court_of_Session

Page: 165↓

Court of Session Inner House First Division.

Saturday, December 21. 1878.

16 SLR 165

City of Glasgow Bank Liquidation—(Alexander Mitchell's Case) Alexander Mitchell

v.

The Liquidators.

Subject_1Trust
Subject_2Resignation by Trustee after Commencement of Liquidation Proceedings
Subject_3Right to have Name Removed from Register.
Facts:

The City of Glasgow Bank stopped payment on 2d October, and no business was transacted thereafter. On the 5th notice was given to the shareholders that at a meeting to be held on the 22d a resolution would be brought forward to have the bank wound up by reason of its insolvency. A trustee, one of six, whose names were on the bank register, resigned his office by minute of resignation dated 16th October subsequently, and entered the resignation in the sederunt book of the trust. The minute was signed by all the other trustees and by the beneficiaries. A certified copy of it was delivered next day to the secretary of the bank, with a request to remove the party's name from the register of members, or to make a note of the resignation upon the stock ledger, as was the bank's custom in such cases. The directors declined to do either.

In a petition brought for removal of the name from the bank's register— held that in accordance with the judgment of the Court in Nelson Mitchell's case ( ante p. 155), the directors of the bank were not entitled to make any change upon the register subsequently to the declaration of insolvency.

Opinion per Lord Shand that the right of a partner to be taken off the register came to an end on the 2d October when the bank closed.

Headnote:

This was a petition by an executor and trustee for removal of his name from the register. He asked alternatively that his name should be removed from the list of contributories, or that such a condition should be attached to his name that he was only to be liable to make the trust-estate forthcoming. Mr Mitchell had taken out confirmation as executor of Mr Waters the testator, and the confirmation, including the bank shares, had been transmitted with his authority for registration. He had executed a resignation of his trusteeship, signed by the other trustees and beneficiaries, on 16th October, and intimated it to the bank on the 17th.

Argued for the petitioner—A trustee could resign at common law without any formal transfer of his right to others— Gordon's Trustees v. Eglinton, July 17, 1851, 13 D. 1381. The second section of the Trust Act 1861 (24 and 25 Vic. cap. 84) contemplated by implication that by resignation a trustee was relieved of future liability. He was in the same position as a shareholder who had executed a transfer. Both got the benefit under the Companies Act 1862, sec. 38, of being put into the postponed list.

Argued for the liquidators—The present question was to be taken on the footing that an executor whose confirmation was registered was a partner of the bank with individual liability, otherwise the liquidators had no interest to oppose the petition. The petitioner stood upon the register in a double capacity. He was joint-owner with his co-trustees of the shares in the bank, and bound to make them forthcoming, but he was also a partner in a trading company. Even if the mere resignation was enough to rest a legal title to the estate in the remaining trustees as between them and the beneficiaries, it did not follow that it also annulled the relation of partnership.

The practice of the bank in accepting minutes of resignation and writing them on the margin of the stock ledger opposite the party's name was not commendable, and could not override the company's statutes.

[In answer to the Court, Mr M'Laren stated that in some cases in which none of the original
Page: 166↓
trustees were now alive there was no transfer, but only successive entries of their names on the bank's books.]

That did not discharge from liability as a partner, and it was not for the bank to insist on a transfer being executed. The whole construction of the contract of copartnery was against the theory that a trustee could escape by simple resignation.

The circumstances under which the resignation took place were such as to preclude its having any effect. The directors could take no action after the declaration of insolvency.

At advising—

Judgment:

Lord President—In this case of Alexander Mitchell the entry in the register stands as follows:—“Alexander Mitchell, residing at Auchinclutha, Hamilton; Mrs Katherine M'Lannahan or Waters, widow of the deceased Andrew Waters, who resided at Belville, Edinburgh; and James Maclaine Waters, residing at Belville aforesaid, John Perks M'Lannahan Waters, George Thomas Brown Waters, and Mary M'Kinlay Waters, children of the deceased, and all residing at Belville, original and assumed executors of the deceased, confirmed as such, conform to confirmation in their favour by the Commissariat of Edinburgh, dated 12th July 1875.” And this entry in the register stands down to this moment undisturbed and unrecalled. But the petitioner Alexander Mitchell became desirous of resigning his office as trustee, and he proceeded, under the Trust Act, 24 and 25 vict. cap. 84, to make a minute in the sederunt book of the trust on l6th October 1878, by which he resigned, in terms of the statute, his office of trustee and executor, and all the other trustees, including among them the beneficiaries, signed this minute in token of their acquiescence in the resignation. He thereafter, on 17th October, the following day, caused to be delivered to the secretary of the City of Glasgow Bank a certified copy of the minute of resignation, and requested that in pursuance thereof his name should be removed from the stock ledger or register of members of the said bank, and it is made a matter of admission that it was the practice of the bank on receiving notice of the resignation of a trustee or executor to make an entry to that effect by a note in the stock ledger at the place where the name of the person resigning was entered. But the directors declined either to make the alteration upon the register, which was the first proposal made by the petitioner, or to make a note on the register of the resignation which had been intimated.

I am desirous in this case of not expressing any opinion as to what might be the effect of a resignation by a trustee or executor, and the intimation of that resignation to the bank directors, and the entry upon the register of such a kind as is mentioned in that admission which I have just read, where the bank is carrying on a business, and nothing has occurred in the nature of an advance towards liquidation; but in the present case the circumstances are very different from these. I need not recapitulate them, because I have already had occasion to express my views on them in the case of Nelson Mitchell, which we have disposed of, and it appears to me, in accordance with the judgment we pronounced in Nelson Mitchell's case, that it was impossible for the directors to go upon the admission of the beneficiaries made on the 17th October. I take it for granted, in disposing of this petition, that, if the resignation and its intimation had been made while the bank was in a state of solvency and carrying on business, this notice upon the register, which is said to have been made in practice, would have been sufficient to discharge this petitioner of liability; but it is just because that might have been its effect, and is, as contended by the petitioner, to be its effect, that I think it was altogether out of the question for the directors to take that step.

It is to be observed that it is not the mere intimation of the resignation that is subsequent to the declaration of insolvency, but it is the resignation itself; and I think no effect can be given to what is done by a partner of this company after the declaration of insolvency to free himself from his liabilities. That is the simple ground on which I proceed in refusing this petition.

Lord Deas—I am entirely of the same opinion. The doors of the bank were shut on the 2d October, and on 5th October there was a declaration by the dirctors to which allusion has been made, and which, as we have already held in Nelson Mitchell's case, prevented anything being done after that. The principle upon which we proceeded in that case applies to the case of resignation. Not only was the register allowed to stand as it was down to 17th October, but until 17th October there was no resignation. I cannot see how it is possible, consistent with the judgment we have pronounced in the other case, to say that resignation is to take effect, and that the petitioner's name can be removed from the register.

Lord Mure—I think this case is substantially ruled by the decision in Nelson Mitchell's case. We have held in that case that, at all events after the 5th of October, when intimation was made that the company of which this gentleman is a shareholder was utterly insolvent, the register of shareholders could not be altered by the directors, and it was impossible for the petitioner here by executing a resignation to have himself put in a better position than he stood in at that date. When the circular was issued he stood registered and liable as a trustee.

It is admitted that his resignation was accepted by his co-trustees, and is a good one; but then his resignation was effected at a time when no act of his could take him out of the position he then stood in, and he, having been a shareholder of the company, was bound to have known that on the 5th of October the company was insolvent, and unable to carry on its business any longer.

I think it right to say that I desire to reserve my opinion as to what may be the decision in any case that may come before the Court wherein a trustee has resigned and his resignation has been accepted by his co-trustees at an earlier date in October than that at which the bank was known to be insolvent. It is said by the parties that no note of the managers of the bank is necessary if the resignation of a trustee is a good one and other parties are left to represent the trust-estate. I give no opinion on that point either.

Lord Shand—In the case of Nelson Mitchell I

Page: 167↓

have already had occasion to explain the grounds on which it appears to me that the directors of the bank were entitled and indeed bound to decline to register transfers after the 2d October, and at all events after the 5th October. I think they were bound to hold the register closed so far as they were concerned at least by the 5th October, and that in any application to rectify the register now under the 35th clause of the Act of 1862 the question must be determined on the footing that the register was closed by that date, and that the rights of all parties depend on what had occurred prior to that date. The proposal of the petitioner to give effect to a resignation which occurred about a fortnight afterwards, and in respect of that resignation to have the register opened for the purpose of enabling him to be relieved of all liability to creditors of the bank, is clearly inadmissible, and must be rejected.

The Court therefore refused the petition, with expenses.

Counsel:

Counsel for Petitioner— M'Laren— Balfour— Pearson. Agents— Campbell & Smith, S.S.C.

Counsel for Liquidators— Kinnear — Asher— Lorimer. Agents— Davidson & Syme, W.S.
1878