Scottish Court of Session Decisions

The ship “John Watson” was built in the year 1875 at Banff by John Watson senior, shipbuilder there. The whole of the shares with the exception of eight were shortly after the completion of the ship sold to various parties, who were duly entered on the ship's register as owners thereof. The name of the builder, John Watson senior, continued on the register as owner of the above-mentioned eight shares down to the date of his sequestration. In point of fact, however, John Watson senior had on 14th July 1875 executed and delivered to his son, who was the petitioner in this case, a bill of sale of four of the eight shares, the price of the shares being duly paid to John Watson senior on or about the same date. From July 1875 the managing owner of the ship paid the proportions of profits earned by the ship effeiring to these four shares to the petitioner, although his name did not appear on the register. The estates of John Watson senior were sequestrated under the Bankruptcy Acts on 7th March 1879, and the respondent Alexander Duncan was duly appointed trustee thereon, and advertised for sale the whole eight shares standing in the bankrupt's name on the register. In these circumstances John Watson junior presented a petition to the Lord Ordinary on the Bills in terms of the 104th section of the Bankruptcy (Scotland) Act 1856 to have it declared that said four shares included in the bill of sale granted to the petitioner were his property, and to have the respondent ordained to grant such deed as should be necessary to obtain the petitioner registered as the owner thereof, and in the meantime to have the respondent interdicted from selling the shares belonging to the petitioner.

The respondent lodged answers, in which he denied “the material statements made in the petition,” admitting however the sequestration, his own appointment as trustee, the building of the ship in 1875, the absence of the petitioner's name from the register, and that the bankrupt was entered on the register as owner of the shares in question, and that the respondent claimed right to the four shares. He also set forth that on 21st April 1879 he had upon production of his act and warrant of confirmation been duly entered on the ship's register as owner of the whole of the eight shares, including the four in question. He further stated that the bankrupt in his state of affairs gave up the shares in question as part of his assets; that the bankrupt had been examined on three separate occasions, and had on the first two occasions deponed that the eight shares were his property—only explaining on the last occasion that he had sold four of them to the petitioner in 1875. In these circumstances the respondent submitted— First, that the petitioner had no right or title to the four shares in question; Second, that the respondent being the registered owner of the shares in room and place of the bankrupt, who was the registered owner, was entitled to sell and dispose of the shares for behoof of the bankrupt's creditors; and further, that the petitioner's statements were irrelevant.

The Lord Ordinary ( Adam) on the Bills pronounced an interlocutor refusing the prayer of the petition and decerning. He added this note:—

“ Note.—The Lord Ordinary does not think that this case can be distinguished from that of M'Arthurs v. M'Brair, June 20, 1844, 6 D. 1174.

It was by reason of the petitioner's own negligence that the bill of sale in his favour remained unregistered for nearly five years.

It appears to the Lord Ordinary that in consequence of this delay the respondent has become the duly registered owner of the shares in question; and if, as the Lord Ordinary thinks, the result is that the petitioner has thereby lost his right to the shares, it is his own fault—Maclachlan on Shipping, p. 36.

The Lord Ordinary was referred to the cases of Dingwall, 6th June 1822, 1 Shaw 463; Gordon, 5th February 1824, 2 Shaw 675; and to the cases cited in the notes to Bell's Com., i. 403–7, but none of these referred to the case of property held on a registered title.”

The petitioner reclaimed, and argued—The Merchant Shipping Act of 1854 differed in two essential respects from the Shipping Acts previously in force. In the first place, it was no longer declared that a bill of sale should be null if not in the statutory form, nor that a bill of sale should be of no force or effect until registered as had previously been the case; and, in the second place, beneficial or equitable interests in ship property were distinctly recognised by the Act of 1854, as interpreted by the Merchant Shipping Acts Amendment Act 1862, section 3. The execution and delivery of the bill of sale therefore now passed the property to the grantee, or at all events vested him with a beneficial interest, which he could vindicate whatever was the state of the register. The bankrupt after granting the bill of sale could have no higher right than that of a mere trustee for the petitioner, and so the shares in question were not attachable for debt in terms of section 102 of the Bankruptcy (Scotland) Act 1856, and therefore never vested in the respondent, or at all events the respondent could only take the bankrupt's estates tantum et tale as they stood in the bankrupt.

Page: 792↓

Authorities on the Shipping Acts— Liverpool Borough Bank v. Turner, 29 L.J. (Ch.) 827, 30 L.J. (Ch.) 379; Abbot on Shipping, 55, 56; Stapleton v. Hayman, 2 H. & C. 918; Lindley on Partnership, 644; Holderness v. Lamport, 29 Beav. 129. On the respondent's rights under the Bankruptcy Acts— Mackenzie v. Watson and Stuart, M. 10,108; Lindsay v. London and North-Western Railway Company, January 27, 1860, 22 D. 571; Littlejohn v. Black, December 13, 1855, 18 D. 207; Fleeming v. Howden, July 16, 1868, 6 Macph. (H.L.) 113; Edmond v. Gordon, 3 Macph. 116, and the cases mentioned by the Lord Ordinary.

The respondent argued—The Merchant Shipping Act of 1854 made it imperative that every bill of sale should be registered. The register of shipping property had really come to be regarded in the same light as the register of land rights—the public looked to it as final, and were entitled to do so. The fact that the petitioner was not registered was due to his own laches—by allowing the bankrupt's name to remain on the register he had enabled him to obtain a false credit, and so had created a sort of reputed ownership whatever effect might be given to the bill of sale. Stapleton v. Hayman was distinguishable, as there was no negligence on the part of the grantee in that case. There must be some limit to the doctrine of tantum et tale. In a sense, every man who was in debt and possessed money, held that money in trust for his creditors, but his trustee in bankruptcy was entitled to it for the general behoof free from any special claims. An unintimated assignation could not compete with the claim of the trustee in bankruptcy—no more could an unregistered conveyance of feudal property if the trustee got his title first put on the register. That was precisely the case here.

Authorities— Davidson v. Boyd, Nov. 5, 1868, 7 Macph. 77; Tod's Trustees v. Wilson, July 20, 1869, 7 Macph. 1100; Wylie v. Duncan, 1803, M. 10,269; Duffus v. Lawson, February 13, 1857, 19 D. 430; Morrison v. Harrison, February 3, 1876, 3 R. 406.

At advising—