Scottish Court of Session Decisions

On 28th August 1876 John Athya, sole partner of the firm of John Athya & Company, grain merchant, Glasgow, executed as such sole partner and as an individual a trust-deed for behoof of his creditors in favour of James Wyllie Guild as trustee. The creditors of the firm, with the exception of the Clydesdale Banking Co., to which Mr Athya was indebted to the amount of £12,185, 10s. 5d. on a number of bills granted by him, formally acceded to the trust-deed, which contained a provision that the question of the terms

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on which Mr Athya should be entitled to a discharge should be determined by a committee of creditors. The bank, however, as well as the other creditors, lodged with Mr Guild, as trustee, claims on the estate of Mr Athya. Mr Guild admitted the claims of the bank, subject to the claimants formally concurring in the trust-deed in terms of the enclosed form within eight days, and failing this the trustee rejects the claim in tote. The form of concurrence referred to as enclosed was—

“( Place and date).

Gentlemen, … . . hereby approve and concur in the trust-deed executed by John Athya & Co., merchants, Glasgow and Liverpool, and John Athya, sole partner thereof, in favour of James Wyllie Guild, chartered accountant.”

The bank did not fill up the form, and Mr Guild rejected their claim. Mr Guild declared a dividend in 1877, and the creditors other than the bank, and one creditor who allowed the dividend effeiring to him to remain unpaid, received a dividend accordingly.

On 3d September 1880 Mr Athya, who had left Scotland and settled in Liverpool, was granted a deed of discharge. On 17th September 1880 the bank raised this action against him, concluding for £12,185, 10s. 5d., the amount due on the bills. They at the same time used arrestments in the hands of Mr Guild; and pleaded—“(4) The pursuers having never acceded to the trust executed by the defender John Athya, are entitled to decree against him as concluded for.” Athya defended the action, and Mr Guild appeared and was sisted as a defender.

The defenders pleaded—(1) No jurisdiction, in respect that the defender John Athya has no domicile in Scotland, and that no funds belonging to him have been attached by arrestment. They also pleaded—(2) That the pursuers were barred in respect of having acceded to the trust. And (3) That the pursuers were barred by their actings from challenging the said trust-deed.

The Lord Ordinary repelled the defences and decerned against the defender Athya in terms of the conclusions of the summons.

Both defenders reclaimed, but Mr Guild withdrew his reclaiming-note before the case was heard in the Inner House.

Argued for Athya—The bank must be held to have acceded to the trust-deed rebus ipsis et fact is. The trust-deed should have been cut down by sequestration if accession was not intended, whereas the trust-deed had been acted on for a considerable time within the knowledge of the bank. The conduct of the bank was at least such acquiescence as may deceive the other creditors into a line of conduct which had they been made aware of opposition they would not have pursued-2 Bell's Comm. (7th ed.) 393—and the bank was therefore barred from insisting in this action.

Counsel for the bank was not called on.