Scottish Court of Session Decisions

John Baldwin, whose domicile was in Burnley, Lancashire, carried on business as a fancy goods dealer there. He also, in partnership with Harry Christopher Preedy of Halifax, Nova Scotia, did business as a glass and crockery-ware-dealer in Barrington Street, Halifax, under the firm of Baldwin & Company. He also, under the name of John Baldwin & Company, carried on business as a dry-goods, hardware, and general merchant at Water Street, Halifax, and he had as partners in this last business, down to 15th December 1880, James de Blois and James Fraser. On that date the copartnership was dissolved.

On 4th January 1881 Baldwin filed a petition in the County Court of Lancaster at Burnley for the liquidation of his affairs, in accordance with the provisions of the English Bankruptcy Act of 1869. In the petition he was designed as follows:—“John Baldwin, of No 7 Willow Street, in the burgh of Burnley, in the county of Lancaster, carrying on business as a fancy goods dealer at No. 2 Hammerton Street, Burnley, aforesaid, and also carrying on business as a glass and crockery-ware dealer at Nos. 223, 225, and 227 Barrington Street, at Halifax, Nova Scotia, in the dominion of Canada, in copartnership with Harry Christopher Preedy of Chestnut Place, Halifax aforesaid, under the style or firm of ‘Baldwin & Company;’ and also carrying on business as dry goods, hardware, and general merchant at Water Street in Halifax, Nova Scotia aforesaid, under the style or firm of ‘John Baldwin & Company,’ which

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said business of ‘John Baldwin & Company’ was, until the 15th day of December last (1880), carried on by the said John Baldwin in copartnership with William James de Blois and James Fraser at Water Street, in Halifax aforesaid, under the style or firm of ‘John Baldwin & Company,’ and which last-named copartnership was dissolved on the said 15th day of December last.”

On 3d February 1881, at a general meeting of the bankrupt's creditors held under the provisions of the Bankruptcy Act, it was, inter alia, determined that the estates should be liquidated by arrangement, and that Arthur Okell, chartered accountant, 22 Renfield Street, Glasgow, and Edward Foden, accountant, Manchester Road, Burnley, be appointed trustees, and that all necessary acts might be done by one or both trustees. Certain creditors of the bankrupt were also appointed a committee of inspection.

At a meeting of this committee of inspection held at Manchester upon the 11th of March 1881, it was arranged that Mr Okell should proceed to Halifax along with the bankrupt Baldwin, and investigate the affairs of the two concerns “Baldwin & Co.” and “John Baldwin & Co.,” and “report as soon as possible what the exact value of the estates may be; “also that Mr Okell in the meantime have power to make such arrangements in Halifax as he may deem necessary for the benefit of creditors, until he shall have time to send home a thorough report, and to do his utmost to protect the interest of the creditors in this country.” He accordingly went out to Canada along with the bankrupt, and he was there advised that his office of joint-trustee under the liquidation proceedings in England did not give him a title to deal with the estates of the firms there. As a result of negotiation, however, which need not here be detailed, he obtained, in connection with the hardware business of “John Baldwin & Co.,” and brought to this country, a sum of £603, which he lodged in bank in Glasgow under the title “Arthur Okell, for the creditors of John Baldwin & Co.;” and he obtained in connection with the glass and crockery business carried on along with Preedy, under the firm of Baldwin & Co., the sum of £1004, 3s. 3d. These funds he also brought to this country, and lodged in bank at Glasgow under an account titled—“Arthur Okell, for the creditors of Baldwin & Company.”

Actions of multiplepoinding relating the one to the £603, the other to the £1004, were thereafter raised in the Court of Session by Okell & Company, warehousemen, Glasgow, creditors of John Baldwin & Co. and of Baldwin & Co. (the two Halifax firms), in name of Mr Okell, the trustee, as holder of the funds, against, in the one case, the creditors of John Baldwin & Co., in the other of Baldwin & Co., and also in both cases against Mr Foden and the nominal raiser as joint-trustee. In both cases it was averred that the funds deposited in bank were insufficient to meet the claims of the creditors of the respective firms John Baldwin & Co. and Baldwin & Co.

Appearance was entered for Foden in both actions, and on 11th December 1883 the Lord Ordinary found the nominal raiser (Mr Okell) liable only in once and single payment, and ordered claims. On 8th January, the Lord Ordinary having heard counsel on a motion for an order on the nominal raiser (Okell) to consign the fund in medio in the usual form, refused the motion in hoc statu.

Note.—[In the action against the creditors of Baldwin & Co., relating to the £1004. After stating the facts above detailed]—‘In these circumstances the question which has arisen, and which this action is brought to determine, is whether the moneys received by Mr Okell under the arrangement described are to be distributed by him and his co-trustee among the creditors of John Baldwin, or whether they are to be distributed among the creditors of Baldwin & Co.? The jurisdiction of this Court is not disputed, because the holder of the fund is resident in Scotland, and the moneys are deposited in his name in a bank in Scotland. But it is said that this is not a convenient forum for trying the question, and that proceedings have been taken in the Court of Liquidation in England, which is the proper forum. I do not decide that question at present. It has not been argued, and I express no opinion upon it. But it is evident that there are grounds upon which the plea that Mr Lorimer says he meant to take may reasonably be maintained; and if it should turn out that the question is truly a question in the liquidation, or that it would be more expedient that the questions should be tried in England, by reason of there being questions of English law, implicated with the administration of an insolvent estate which is in course of liquidation under the English Bankruptcy Act, there would be ground, according to our practice, for sustaining a plea of forum non competens, which, as the Lord President pointed out in Martin v. Stopford Blair, Dec. 4, 1879, 7 R. 329, really means that of two Courts having jurisdiction to try a question, it is more expedient to try it in one than in the other.’

“No doubt the plea should have been taken by way of defence, and before the usual interlocutor was pronounced. But I do not think the parties are precluded from raising it, and that being so, it would be premature to order the fund to be consigned in name of the Clerk of Court. It would be premature for another reason, because the condescendence of the fund has not been approved of. But even if there be no question as to the amount, I think it inexpedient to order the consignation asked until it has been determined that this Court is the proper and convenient forum. If the money were in improper hands, or if there were any risk of its being lost, it would be a different matter. But nothing of the kind is suggested. It is said that the fund may be taken out of the jurisdiction by an order which the Court of Liquidation may or may not pronounce in the exercise of its discretion. But I must assume that any order which that Court may pronounce, and which is not taken to appeal, will be a proper order, and within its jurisdiction— Wilkie v. Cathcart, 9 Macph. 171.”

In the other action the Lord Ordinary pronounced the same judgment.

On 1st February 1884 the Lord Ordinary again, the circumstances not having materially altered, refused the motion for an order on the pursuer and nominal raiser to consign the fund in medio.

On 26th February 1884 the Lord Ordinary allowed defences against the competency of the actions of multiplepoinding for Foden, Okell's

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co-trustee, to be received, under reservation of all questions of competency. In these defences it was maintained that the money recovered by Mr Okell in Canada, and forming the funds in medio in the respective actions, fell to be distributed in the proceedings in the Lancashire County Court, and it was stated that that Court had issued an order on Mr Okell to pay them into the bank at Burnley.

Foden pleaded forum non conveniens.

A record was then made up in each case on the summons and these defences, and on 20th March 1884 the Lord Ordinary (in each of the actions), “in respect of the interlocutor of 11th December 1883 finding the pursuer liable in once and single payment,” repelled the defences, granting leave to reclaim.

“ Opinion.—The questions in controversy in this action, and in the action with reference to the assets of Messrs Baldwin & Company, in the hands of the same trustee, appear to me to be questions in the liquidation which may be proper for the consideration of the English Court of Bankruptcy, but with which this Court ought not to interfere. It is maintained that by virtue of the Bankruptcy Act the whole moveable estate of the bankrupt, wherever situated, is vested in the trustees appointed under the liquidation proceedings; and it is equally clear that it was in his character of trustee that the nominal raiser was instructed to proceed to Canada to investigate the affairs of the bankrupt's Canadian firms, and to make such arrangements as he could for the benefit of the English creditors of these firms. If his title had been recognised, and the assets of these firms had been at once handed over to him, there can be no question that they would have been in the same position as any other assets of the bankrupt's estate in the hands of the trustees for creditors; and in that case the English Court of Bankruptcy would undoubtedly have had an exclusive jurisdiction to regulate their distribution, on the ground explained by the Lord President in the case of the Phosphate Sewage Company v. Lawson, July 5, 1878, 5 R. 1138, viz. that ‘Whenever the Court of the domicile has by proceedings in bankruptcy vested the moveable estate of the bankrupt in a trustee or assignee for the purpose of equal distribution among his creditors, no part of the moveable estate, wherever situated, can be touched or affected except through the bankruptcy proceedings, and by the orders of the Court of that country in which those proceedings took place. ‘His Lordship adds that this proposition is fully supported by the case of Struthers v. Reid, M., v. Forum Competens, App. 4; Maitland v. Hoffman, M., Bankrupt, App. 26; and Poetze v. Aders & Company, 2 R. 150; and that the principle is still applicable where the bankrupt is a trader having two trading domiciles, as appears from the Royal Bank v. Scott, Smith, Company, 20th January 1813, F. C.; Selkrig v. Davies & Salt, 2 Dow 230; and also from the case of the Phosphate Sewage Company v. Lawson.

It is said that the rule is excluded because the assets in question were obtained, and are now held, by the trustee under a special contract for the benefit of particular creditors—the creditors of the two Canadian firms respectively—in preference to any other creditors of the bankrupt. It does not appear to me that this consideration makes any difference. It was still in the character of trustee appointed in the English bankruptcy proceedings, and in the execution of the trust so committed to him, that the nominal raiser obtained the moneys in question; and it is to the English Court of Bankruptcy that he must account for them. It is said that if the funds are paid into the English Bankruptcy Court the assets of the Canadian firms will be made available for the personal creditors of Mr Baldwin to the prejudice of the firm's creditors. But that is plainly a misapprehension. The trustees in bankruptcy are trustees for the creditors of the two firms, as well as for the personal creditors. If there is a question of preference between the firm's creditors and the personal creditors, it will be determined by the Court of Bankruptcy; and the estates will be distributed according to the rights of parties, whether these are based upon special contract or on the general rules of law. But the mere statement that such a question may be raised is sufficient to show that these actions ought not to have been brought in Scotland. For this Court cannot undertake to distribute the insolvent estate of a domiciled Englishman when proceedings in bankruptcy have been already instituted in England for that purpose.

It is said that the Court has undoubted jurisdiction. But I conceive that it has no jurisdiction for the special purpose of this action. In the case already cited, the Lord President says—‘The trustee in a Scotch sequestration may be subject to the jurisdiction of the English Court, or the assignees in an English bankruptcy may be subject to that of a Scotch Court personally, but I am of opinion that in their character of trustee and assignees respectively they can be subject to the jurisdiction of no Court except the Court of the country within which the bankruptcy proceedings have been instituted and the concursus creditorum has been established.’

For these reasons I should have sustained the defences which have been lodged, and dismissed the action. But unfortunately the defences have not been lodged in time, and the interlocutor of 11th December 1883 was therefore pronounced in ordinary course, the competency of the action not being disputed. I cannot now dismiss the action without recalling that interlocutor, which I have no power to do, except of consent of parties. There is no alternative, therefore, except to repel the defences as incompetent at this stage of the proceedings. But in the special circumstances of the case I have thought it right to express my opinion upon the merits, and I shall grant leave to reclaim.

Foden reclaimed.

The argument was taken in the action in which the creditors of Baldwin & Co. were called, and in which the fund in medio was the £1004, 3s. 3d.

Foden argued—The plea of forum non conveniens should be sustained, and the Lord Ordinary would have given effect to it as stated in his note but for the technical difficulty of the defences not having been received until after the interlocutor of 11th December 1883 had been pronounced.

Argued for respondents—The English liquidation dealt entirely with the estates of John Baldwin, whereas the sums recovered by Okell and lodged by him in bank were proceeds ingathered for behoof of creditors of the two

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Canadian firms of which John Baldwin was a partner, and they could not, therefore be made available in the English liquidation. These estates which had been obtained under special contracts with the Canadian creditors of Baldwin's businesses there ought not to be administered by the English Bankruptcy Court but according to Canadian law.

Authorities in addition to those quoted by the Lord Ordinary— Clements v. M'-Auley, March 16, 1866, 4 Macph. 583; Lindley on Partnership, p. 101.

At advising—