Scottish Court of Session Decisions

The estates of Michael Teenan, farmer in Greenmerse and Crookthorn, in the parish of Troqueer and Stewartry of Kirkcudbright, were sequestrated by the Sheriff-Substitute of the Stewartry of Kirkcudbright on 2d November 1883. In the month of April preceding, on the application of the bankrupt's friends and relations, Mr Henderson, solicitor, Dumfries, had been appointed curator bonis to the bankrupt, and Mr James M'Gowan as agent to the curator. Mr M'Gowan advertised for claims against the bankrupt estate, and among others lodged was one for £100 by Hugh Crawford, horse-dealer. In prosecuting his investigation Mr M'Gowan became aware of other bills in Crawford's hands, and of bills in the hands of Union Bank at Beith to the amount of £1450, on which were both the names of Crawford and the bankrupt. It appeared that these bills were in connection with a farm (Laigh Grange) in Ayrshire, in which both were interested. The farm was being carried on by Crawford for behoof of himself, the bankrupt, and Mr Richmond, brother of the tenant lately in the farm, who were all large creditors of the tenant. Crawford lodged no claim with the curator bonis except for the £100 already referred to.

Thomas Kerr, farmer, Whitehill, near Sanquhar, was appointed trustee in the sequestration. He issued a report on 2d January 1884, after the bankrupt's examination, which had taken place on 20th December 1883, and at which Mr M'Gowan had been examined and had given evidence as to the bills just mentioned. In this report the trustee submitted a state of his affairs, from which it appeared that the assets were £1702, 1s. 8d.; liabilities, £2609, 18s. 1d.—leaving a deficiency of £907,18s. 1d. The trustee further reported that he had received intimation calling up the amounts lent on bonds on the bankrupt's heritable estate, and he proposed that the heritable property should be disposed of at once.

The first meeting of creditors after the election of a trustee was held on 2d January 1884, being the same date as this report. Mr Kerr, the trustee, was present as mandatory for Crawford, who claimed to be a creditor on the estate, and who claimed to be ranked as a creditor on (1) two bills dated 29th December 1882, drawn at four months by James Richmond upon and accepted by Matthew Richmond, endorsed by James Richmond to the bankrupt, and from him to the claimant; (2) acceptance by M. Teenan & Son, of which firm the bankrupt was a partner, at two months from 1st August 1882; (3) bankrupt's proportions of two acceptances, both dated 23d October 1882, at six months, drawn by the claimant, the bankrupt, and James Richmond, and accepted by Matthew and William Richmond, but dishonoured by the acceptors and uplifted by the claimant.

The total claim for Crawford on these bills was £1581, 7s. 11d., making him the largest creditor.

There also attended as a creditor Robert Teenan, the bankrupt's son, who claimed to be a creditor for £260, 12s. 4d., as the amount, with interest, of an advance to bankrupt to enable him to square accounts with Mr J. A. Smyth, solicitor, Dumfries. He produced with this claim a receipt in bankrupt's favour from Mr Smyth for £200, as follows:—“ Dumfries, 4 th April 1876.—Received from Mr Michael Teenan, horse-dealer here, the sum of £200 sterling, in full of all claims between us; Mr Teenan to grant me a discharge of all claims for money received by me on his account, that is to say, mutual discharges. The expenses of the process Charles M. Robertson v. Michael Teenan are not included in this settlement, the same being reserved by me, as this case is not yet finished.” Also a cheque, dated 6th April 1876, by the bankrupt for £200, and payable to the claimant Robert Teenan, or bearer; and a letter from Mr Smyth to the claimant dated 17th December 1883, as follows:—“Dear Sir—With reference to the receipt granted by me to your father Mr Michael Teenan, dated 4th April 1876, for the sum of £200 sterling, said receipt being in full of all claims between us as therein mentioned, I beg to state, as desired by you, that the said sum was paid by you, outwith the presence of your father, out of your own personal funds, as an advance to your father, to be repaid by him. — Yours truly, J. A. Smyth.”

Other creditors and mandatories also appeared. It was moved by a mandatory for creditors, Mr Hairstens, that the trustee be instructed to sell the bankrupt's heritable property by auction on obtaining consent of heritable creditors, and by another mandatory that he be instructed to sell it and no further instruction be given. For the latter motion Mr Kerr, as mandatory foresaid, and Bobert Teenan, and one other creditor, voted, and they being a majority in value their motion was declared carried.

It was then moved by Mr Sharpe, mandatory for Mr R. Maxwell Witham and other creditors, that, inter alia, the trustee be directed to obtain from the claimant Crawford a strict accounting of his intromissions in connection with the farm of Laigh Grange, Ayrshire (that which it had been discovered at the time the curator was appointed that the bankrupt Crawford and the Richmonds, mentioned in Crawford's claim, were connected with), and of the bankrupt's interest therein; and further, that the trustee consult counsel as to reducing a bond which the bankrupt had some time before granted to a son named James Teenan. Against this motion Mr Kerr, as mandatory for Crawford, Robert Teenan, and Mr M'Gowan, mandatory for a creditor, voted, and they forming a majority in value it was lost.

Mr Sharpe, on behalf of Mr Maxwell Witham, appealed to the Sheriff.

The Sheriff-Substitute ( Maxwell) pronounced this interlocutor:—“Sustains the first objection stated to the vote of Thomas Kerr, mandatory for Hugh Crawford: Sustains the objection stated to the vote of Robert Teenan: Finds it unnecessary to deal with the other objections: Finds

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that there is a majority of votes, in point of value, in favour of the resolution proposed by Mr Hairstens: Finds, further, that there is a majority of votes in point of value in favour of the resolutions proposed by Mr Sharpe: Therefore recals the resolutions appealed against: Declares that the resolutions proposed by Mr Hairstens and Mr Sharpe respectively are the resolutions of the second general meeting of creditors on the sequestrated estates of Michael Teenan, held in the New Bazaar Hotel, Dumfries, on January 2, 1884, &c.

“ Note.—This is an appeal against the resolutions of the creditors at the first meeting after the election of a trustee. The appeal is on two grounds—(I) That the votes of the mandatory for Hugh Crawford and of Robert Teenan are invalid; (II) On the merits, that the resolutions are inexpedient, and should be overturned. The vote of the mandatory for Hugh Crawford is objected to on three grounds—That the claim is not sufficiently vouched; That it is illegal for Thomas Kerr, trustee in the sequestration, to act as mandatory for Hugh Crawford; That Crawford having an interest adverse to the first instruction moved by Mr Sharpe to be given to the trustee, his mandatory cannot vote on this question. As for the objection that the claim is not sufficiently vouched on the face of the bills produced, and, without further information, I take it that these bills would be held as sufficient vouchers, but the appellant argues that the facts stated in the evidence of Mr M'Gowan disclose such suspicious circumstances that the vote of Mr Crawford's mandatory should not be allowed. It appears from the evidence of Mr M'Gowan that the bankrupt was cognosced insane, and a curator bonis appointed in April 1883. Mr M'Gowan was agent to the curator. He advertised for claims on the estate. Mr Crawford did not lodge any, but on being written to he lodged a bill for £100. The agent, on pursuing his investigations, found in the possession of Mr Crawford two bills amounting to £960, and afterwards, other bills in the hands of the Union Bank, Beith, to the amount of £1450, on which were both Mr Crawford's and the bankrupt's names. He further ascertained that these bills were in connection with the farm of Laigh Grange, in Ayrshire, and he was informed that Mr Crawford was carrying on this farm for behoof of himself, the bankrupt, and a Mr Richmond, brother of the tenant who had been in the farm; and that the farm was to be carried on to Martinmas 1883, when the assignation to the lease expired. From the report of the trustee it appears he has not obtained any further information, so that the validity of the vote at this meeting must be judged by examining the bills produced, taken along with the facts stated above. Two of the bills are of date December 29, 1882, at four months’ date, drawn by James Richmond upon and accepted by Matthew Richmond junior, and the one endorsed by J. Richmond to the bankrupt, and by him to Crawford; and the other endorsed by J. Richmond to the bankrupt's firm of Messrs Teenan & Son, and by them to Crawford. Another bill is of date August 31, 1882, at two months’ date, drawn by Crawford upon and accepted by the bankrupt's firm Messrs Teenan & Son. Crawford also claims on a proportion of the sums in two other bills, both of date October 23, 1882, drawn at six months’ date by himself, the bankrupt, and James Richmond upon and accepted by Matthew Richmond junior and William Richmond, endorsed to the Union Bank of Scotland, dishonoured by the acceptors, and uplifted by Crawford. I am of opinion that the objection to this vote is well founded, and the bills are not sufficient vouchers. The claim here is by a confident person; for the claimant Crawford appears to have been joint-tenant with the bankrupt in the farm of Laigh Grange, and also to have managed the farm on behalf of the other joindtenants. There are also suspicious circumstances, of which no explanation is given, in regard to the claimants not having lodged any claim, except a bill for £100, with the curator bonis, even after being written to by the agent. Further, there is no statement as to how the parties stood at the expiring of the lease, when it is to be presumed the stock and crop were realised and there was an accounting between them. I think, therefore, this case is ruled by the decision in Tytler v. Walker, February 28, 1883 [ 20 S. L. R. 440], and that the trustee should not have allowed this vote, because insufficiently vouched. Having sustained this objection, it is unnecessary for me to deal with the other objections to this vote.

Deducting the value of this vote, which is £1575, 7s. 11d., there still remains a majority in point of value in favour of the resolutions as carried, but the vote of Robert Teenan is also objected to on the same ground, that it is not sufficiently vouched. The vouchers are a cheque by bankrupt, payable to the claimant or bearer, dated 6th April 1876, and a receipt by J. A. Smyth for £200 received from the bankrupt, and a letter by Smyth dated 17th December 1883, stating that the £200 was paid by the claimant out of his own funds as an advance to the bankrupt. These documents appear to me of a kind not usually lodged as vouchers. The claim is, in fact, founded on a loan alleged to have been made by the claimant to the bankrupt on April 4, 1876. It is to be observed also that the claim is by a conjunct and confident person, son and partner with his father in the firm of Michael Teenan & Son; it must be therefore very ‘narrowly examined’ ( per Lord Shand in Tytler v. Walker, 28th February 1883), Now, a loan of money can be proved only by the writ or oath of the borrower, and it appears from the case of Haldane v. Speirs, 7th March 1872 [ 9 S.L.R. 317], that a cheque is not a writing sufficient to overcome this rule of law. So I do not think the cheque taken alone would be a sufficient voucher in the circumstances of this case. The claimant has, however, also lodged in support of his claim the receipt and letter mentioned above. The receipt on the face of it bears no reference to the claimant whatever. It is connected with the cheque by the letter of J. A. Smyth. This letter was written for the purpose of being lodged with the claimant's affidavit, and I do not think it can be taken as a sufficient explanation of the receipt, in which it does not appear that the claimant paid the money out of his own funds. I am of opinion, therefore, considering the relation between the claimant and bankrupt, that these documents are not sufficient vouchers, and that the vote should be disallowed. The value of this vote is £260,12s. 11d. Deducting the value of the two votes disallowed, amounting together to £1836, 0s. 10d., there remains

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a vote to the value of £46,18s. in favour of the resolution proposed by Mr M'Gowan, compared with £149, 15s. 1 1 2d., the value of the votes in favour of the resolutions proposed by Mr Hairstens and Mr Sharpe. The latter, therefore, are the resolutions come to by the meeting, and it is unnecessary for me to go into the question of the expediency of the former.”

Kerr, as the trustee in the sequestration, appealed to the Court of Session.

Argued for him—(1) Crawford was not a “conjunct and confident person;” he happened to be joint tenant with the bankrupt in a farm, but that fact did not render him conjunct and confident. It was said that this claim was not sufficiently vouched, but what better vouchers could be obtained than the bills themselves? In the question of expediency it was not necessary to obtain the consent of the heritable creditor in order to sell the heritage; it was ultra vires of the creditors to resolve to sell under sec. 96, and then to hedge the sale with a condition. (2) As to the trustee acting as a creditors' mandatory, it was a matter of constant practice—there was nothing in the statute opposed to it, the only section that might be read in opposition to this being the 51st. Besides, the trustee's remuneration was fixed not by himself but by the commissioner and the Accountant in Bankruptcy. (3) As to the trustee's right to appeal, in the first case he only appeared in answer to a citation, and he now appealed in the interests of the estate. See Forbes v. Mansfield, 13 D. 1272.

Argued for respondent—It was incompetent and improper for a trustee to act as mandatory for creditors. His position among the creditors was that of a judge; he might, if the appellant were right, value his mandant's debts and security, and even vote for his own discharge. Crawford's position, in the absence of any documents of debt confirming the bills, was that of a conjunct and confident person. Teenan's claim was untenable, being a claim by the son of the bankrupt, the only document of debt produced for which was a cheque, which by recent decisions was not a sufficient voucher. The trustee had no right to appeal, not even to appear before the Sheriff. He was not required to attend; all that he got was notice that an appeal was being taken. As to the question of the resolution to sell the heritable estate, the proposed sale was bad, because the amount to be obtained would not cover the bonds upon it. The Sheriff's interlocutor should be affirmed both on the questions of competency and on the merits.

Authorities—Bankruptcy Act 1856, secs. 51, 63, and 152; 2 Bell's Comm. (5th ed.) 350.

At advising—