Scottish Court of Session Decisions

The Bankruptcy and Cessio (Scotland) Act 1881 provides by section 11—“If in any proceedings under the Cessio Acts, where the liabilities of the debtor exceed the sum of £200, it shall appear to the Sheriff that it is expedient, having regard to the value of the debtor's estate, and the whole circumstances of the case, that the distribution of the estate should take place under the provisions of the Bankruptcy Acts, he shall have power forthwith to award sequ estration of the estates which then belong, or shall thereafter belong, to the debtor.” …

John Wright Jaffray, engineer, Albert Square, Dundee, presented a petition in the Sheriff Court of Forfarshire at Dundee praying the Court “to grant warrant for the requisite intimation or citation, and thereafter on resuming consideration of the petition, and advising the whole cause, to find that the pursuer is entitled to the benefit of the process of cessio bonorum, and to grant decree accordingly, and to appoint such person as the Court shall think proper to be trustee.”… This petition was presented by the bankrupt at the request of George Worrall, Dundee, at whose instance he was made notour bankrupt, and at the request also of other creditors.

The petitioner pleaded—“The pursuer being notour bankrupt within the meaning of the Debtors (Scotland) Act 1880, is entitled to the decree of cessio bonorum prayed for.”

The Sheriff-Substitute ( Cheyne) granted warrant to cite the creditors of the petitioner, and ordained him to appear for public examination, and to lodge a state of his affairs, all in terms of the statutes.

The state of affairs showed the liabilities to be £647, and the assets (deducting preferable claims) £501.

On 19th December 1882 the Sheriff-Substitute, after examining the pursuer, and considering the whole process, and in respect that no objection was offered, granted him the benefit of cessio bonorum, and assigned and adjudged bis whole moveable property to Daniel M'Intyre, accountant in Dundee, as trustee for behoof of the creditors.

One of the creditors given up in the petitioner's statement of affairs was the firm of Anderson & Co., who held a promissory-note for £36. Mr A. G. Fleming had in September 1882 guaranteed this sum, and he subsequently paid the debt. Anderson & Co. were given up as creditors in the list lodged by the bankrupt, but not Fleming, the bankrupt not being aware that Fleming had paid it. Fleming appeared in the proceedings subsequently to the date of the interlocutor of the Sheriff-Substitute, and on 27th December 1882 appealed to the Sheriff against the interlocutor granting cessio.

On 15th January 1883 the Sheriff ( trayner) issued the following interlocutor:—“The Sheriff having considered the reclaiming petition, together with the whole process, adheres to the interlocutor appealed against, and dismisses the appeal.

“ Note.—The prayer of the reclaiming note is that I should refuse cessio and grant sequestration. Looking to the extent of the bankrupt's estate, as shown on the state of affairs, I think it would be extremely unfair to subject the bankrupt and his creditors to the expenses of sequestration when the same practical benefit can be obtained by all concerned under the less expensive process of cessio. I have accordingly refused to grant the reclaimer's motion. The reclaimer complains that he was not called as a party to the petition for cessio, and I think this would have been a serious matter if the petitioner had known that the reclaimer was a creditor when the petition was presented. It is not said, however, that he knew this, and from his petition it appears that he gave up William Anderson & Co. as his creditors

Page: 459↓

for the debt in respect of which the reclaimer now claims to be a creditor. The reclaimer seems to have guaranteed and subsequently paid that debt, and while the petitioner knew that the reclaimer had guaranteed the debt, it does not appear, and it is not averred, that the petitioner knew that the reclaimer had paid it, and was in respect thereof his creditor (instead of Anderson & Co.) when the petition for cessio was presented.”

Mr Fleming appealed to the Court of Session, and argued—That cessio should be refused, and sequestration granted, as by this means a fuller disclosure would be made of the bankrupt's state of affairs. It was contemplated by the statute that when the liabilities exceed £200 sequestration and not cessio should be granted. Here, therefore, there should be a sequestration, as the liabilities amounted to £647, while the assets only reached £501. Besides, in sequestrations acquirenda go to the creditors, while in cessio they do not.

Argued for the trustee, and for several concurring creditors who compeared by minute—The motion to grant sequestration should be refused, as the process of cessio which had been granted by the Sheriff-Substitute was much cheaper. No greater powers were obtained under the one than under the other, and, besides, by the statute founded upon, a discretionary power had been given to the Sheriff, and no good reason had been alleged for interfering with that discretion. There was really no material difference between the two processes.