Scottish Court of Session Decisions

Lord Deas—It appeared to me that this note should only be passed upon caution, but it is plain enough that that would prevent any investigation, and as such investigation after what has taken place is a thing which it would be satisfactory to have, and cannot occupy any very long time, I do not dissent from the proposed judgment of your Lordship passing the note without caution.

Lord Mure—I have come to the same conclusion. The only doubt in my mind was as to whether the note should be passed without caution; and in the circumstances of the case I have no doubt the note should be passed to try the points in dispute between the parties. There is a distinct allegation here on the part of the complainer that in the circumstances he made a fair surrender of his property. That is denied by the liquidators, and that is a very material fact in the case which requires investigation. Therefore to clear up that fact, upon which the whole matter turns, requires a proof. The difficulty is as to having that without caution. But it must be observed, that of the £5000 odd that the liquidators take decree for, a very considerable sum has been paid to them, and at least half of that sum was paid on the understanding that the compromise was to take place. The only circumstance which was strongly founded upon on the part of the liquidators is, that he did not disclose the fact that he was a partner of a concern in Glasgow at the time the declaration was emitted. Now, in point of fact that is correct. There was no specific disclosure of that fact. Though he had only recently become a partner, and had put no funds into the concern at that time, it might have been as well if he had stated that fact. But as far as I see at present, that is the only incorrect statement that he made in regard to the information given to the liquidators. It appears that since the date of the declaration he has paid certain sums of money into that concern; but I do not see any evidence that his statement is incorrect, that that money so paid in was all borrowed from friends after the date of the discharge, and that £200 of it was got from the relief fund in Glasgow which was distributed among the unfortunate shareholders of the bank. Now, I cannot conceive it possible that the parties who had the distribution of that relief fund would have contributed this £200 to the complainer if he had been in the position of having funds of his own. Upon the whole facts of the case I think we are warranted in passing the note without caution.

Lord Shand—I entertain a very clear opinion that the Lord Ordinary's interlocutor is right, and that he had no other course in justice to the complainer except that which he has adopted, of passing this note without caution. The statute, in the section of it to which your Lordship has referred, provides that decree shall pass against the contributories in a list given in by the liquidators, as a matter of course, and that a party shall not be heard to resist the granting of that decree at the time it is asked. That, I think, would have been a very harsh and a very unjust enactment if it had not been guarded as it has been by the Legislature; but there is a provision at the end of that section to the effect, that while decree shall be so given for the purpose of despatch in the liquidation, the Court have it in their power in a suspension to allow the decree to be suspended without caution or consignation; and I shall only say that I think that while the Court will no doubt jealously see that a note is not passed in such circumstances without reasonable grounds, on the other hand where there are reasonable grounds for trying the question as between the liquidators and a contributory, the contributory should have the benefit of that provision.

Now, in this case the suspender says—“I arranged that my entire liability should be met by a certain payment;” and the liquidators admit that. He says he made the payment, and the liquidators admit that. He is therefore in the position of having a concluded compromise with them with the authority of the Court. They say they have discovered something subsequently that destroys that agreement, but it appears to me to be very clear that the onus in regard to that matter is upon them; and unless they were in a position to satisfy the Court now beyond all question, upon the documents before the Court, that the agreement was not binding, I think this gentleman is entitled to have the note passed without caution, because it is obvious that if caution is imposed upon him it is simply throwing him out of Court and deciding the case against him.

I shall say nothing upon the merits of the question involved except this, that the case which the suspender presents is one of a class of which we have seen many—where a contributory ruined by the fall of this bank has made arrangements for beginning the world again as soon as he gets his settlement made. He had apparently arranged to enter into a contract of copartnery, and signed the contract in the beginning of March, and on 25th March he signed a declaration in which he says that he had disclosed everything he had in the world. The liquidators say he should have mentioned this contract of copartnery, and I do not say that a very cautious man might not have done so. But if the fact be that that contract of copartnery had given him nothing, and could give him nothing, in the way of property unless and until he got friends to advance money for him to put into the business to enable him to begin the world again, I can perfectly well understand the reason why there was no notice taken of that contract in the declaration. Accordingly, he does say that he had not put a penny into this business, and had not a penny to put into it, and that after he had got his matters arranged friends lent him money, and he put that money subsequently into the business. I put it to the counsel for the liquidators if they were prepared to gainsay that, and if they were in a position to prove that this gentleman had funds of his own which he was improperly concealing, and I got the answer no. In these circumstances I have not the slightest doubt that the clear course in justice to the suspender was to pass the note, and that we ought to adhere to the Lord Ordinary's judgment.

I shall only say further that I think it will be matter of regret if the parties should think it necessary to go into a proof upon this matter unless they find on investigation that there is clear evidence of concealment here. On the one hand, I think the suspender is somewhat to blame for the very loose way in which his explanatory statement was framed. Perhaps he may not be himself at fault for that; it may be that his agent is to blame for it. There is undoubtedly enough in articles 5 and 6 of that statement to justify the liquidators in thinking for a time that there had been an improper concealment here. But when we come to the subsequent part of the statement, and the documents on which it is founded, I cannot help thinking that extra-judicial investigation should show one way or other quite clearly whether the sum of £600 put into the business was not got, as the suspender says it was, from friends after he had made the arrangement with the bank. If it should be found on such extrajudicial investigation—the suspender of course giving every facility in that direction—that this money was really borrowed from friends, and was not property of which he was possessed at the time he made this declaration, then I should hope that this litigation will proceed no further. It may be that the suspender ought to pay the expense caused by the loose statement in his declaration, but I think that this is a case in which the liquidators should make such extrajudicial investigation as I have pointed at, and if possible get this matter arranged.