Scottish Court of Session Decisions

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Cite as: [1884] SLR 22_31, [1884] ScotLR 22_31

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SCOTTISH_SLR_Court_of_Session

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Court of Session Inner House First Division.

Sheriff of Roxburghshire.

Saturday, November 1. 1884.

22 SLR 31

Marquis of Lothian

v.

Smith.

Subject_1Process
Subject_2Cessio Bonorum, Petition for at Debtor's Instance
Subject_3Default
Subject_4The Bankruptcy and Cessio (Scotland) Act 1881 (44 and 45 Vict. cap. 22), sec. 9 — The Debtors (Scotland) Act 1880 (43 and 44 Vict. cap. 34), sec. 9, sub-sec. 6.
Facts:

A debtor who bad presented a petition for the benefit of cessio bonorum failed to appear on the day fixed for his examination, and the Sheriff found that the failure was wilful, and, on the motion of the creditors, granted decree of cessio in his absence. Held that the order for the debtor to appear for examination, pronounced on his own petition, was equivalent to a citation so to appear in the sense of section 9 of the Bankruptcy and Cessio Act 1881, and therefore that decree of cessio had been rightly pronounced.

Headnote:

The Bankruptcy and Cessio (Scotland) Act 1881 (44 and 45 Vict. cap. 22), section 9, provides—“If the debtor fail to appear in obedience to the citation under a process of cessio bonorum at any meeting to which he has been cited, and if the Sheriff shall be satisfied that such failure is wilful, he may, in the debtor's absence, pronounce decree of cessio bonorum.”

The Debtors (Scotland) Act 1880 (43 and 44 Vict. cap. 34), section 9, sub-section 6, provides—“The expense of obtaining the decree [appointing a debtor to execute a disposition omnium bonorum], and of the disposition omnium bonorum, shall be paid out of the readiest of the funds thereby conveyed.”

Thomas Smith, coal merchant, Jedburgh, presented a petition for cessio bonorum in the Sheriff Court of Roxburghshire on 23d May 1884, praying the Court to find that he was notour bankrupt, that he was unable to pay his debts, that he was ready to surrender his whole means and estate for behoof of his creditors, and that his inability to pay his debts had arisen solely from his misfortunes and losses. He submitted a list of his creditors. Among the creditors was the Marquis of Lothian, whose agent had upon the 17th of May 1884 intimated to Smith that unless a debt of £95, 14s. 7d. due by him, and for which the Marquis of Lothian held decree which had been followed by a charge and poinding, was paid, a petition for cessio against him would be forthwith presented.

Upon the 23d May 1884 the Sheriff-Substitute pronounced the usual first deliverance, appointing the petitioner to publish a notice of his petition in the Edinburgh Gazette, to make special intimation to his creditors, and requiring him and his creditors to appear on 19th June as the day fixed for the petitioner's public examination, and the petitioner to lodge six days previous thereto a state of his affairs.

The petitioner failed to appear upon 19th June, the day appointed by the previous interlocutor, and the Sheriff-Substitute pronounced this interlocutor:—“The debtor having failed to appear in obedience to the order of Court, dated 23d May last, and the Sheriff being satisfied that such
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failure is wilful, on the application of all the compearing creditors, and on their motion, decerns the debtor Thomas Smith to execute a disposition omnium bonorum to and in favour of Alexander Sturrock, solicitor, Jedburgh,” whom he appointed trustee for behoof of Smith's creditors. Thereafter, on the trustee's application, the Sheriff-Substitute on 24th June granted a warrant to take possession of all money and moveables belonging to the debtor, and, if necessary for that purpose, to search the debtor's premises, to open lockfast places, and search his person.

Smith appealed against these interlocutors to the Sheriff.

On 22d July 1884 the Sheriff pronounced this interlocutor: — “Finds that the pursuer of the action failed to lodge in the hands of the Sheriff-Clerk, as required by the fourth section of the Statute 6 and 7 Will. IV., cap. 56, all the books, papers, and documents relating to his affairs, and failed, on the day appointed for the compearance of the creditors, to appear in Court for examination, without any sufficient cause for said failures; therefore dismisses the petition, and decerns.

Note.—This is a petition for cessio, not at the instance of a creditor, but at the instance of a debtor against his creditors. The procedure in it is regulated by the seventh section of the Debtors (Scotland) Act 1880, which imports into it the provisions and conditions of the 6 and 7 Will. IV., cap. 56, as well as those of the relative Acts of Sederunt of the Court of Session of 6th June 1839. By the seventh section of that Act of Sederunt it is provided that ‘if the debtor failed to lodge in the hands of the Sheriff-Clerk the state book and other documents required by section 4 of the statute by the time therein specified, the process shall be dismissed by the Sheriff, unless he shall be satisfied that the debtor had sufficient excuse.’ There is no doubt as to the fact of failure, and no sufficient excuse for it either was at the time or has now been stated.

The fifth section of the statute enacts that on the day ‘appointed for the compearance of the creditors the debtor shall appear in public court in presence of the Sheriff for examination as to his affairs;’ and certain provisions are made for the event of the debtor refusing to be put on oath, or to answer questions, or to subscribe his examination, all implying that he shall have appeared for the purpose of being examined. No express sanction is provided for the case of a debtor failing to appear for examination. But that he shall appear is an imperative enactment of the statute, the non-observance of which is inconsistent with further procedure under it as therein provided. The Sheriff therefore is of opinion that in such case nothing can follow but a dismissal of the action. It is like the case of a pursuer not appearing to maintain his action. In a work of practice (M'Glashan, p. 482–3, non-compearance of debtor) dismissal of the action is said to be the course followed in such case; and although the Sheriff has not been able to find any decision upon the point, he sees no other appropriate deliverance.

The action of cessio bonorum at the instance of a creditor and the proceedings therein are regulated by sections 8 and 9 of the Debtors (Scotland) Act 1880. These do not apply to the present action.

In pronouncing the interlocutor appealed from, this distinction has not been adverted to. But these later statutes are not clearly expressed, and do not appear to be carefully framed.”

The Marquis of Lothian appealed to the Court of Session, and argued that the debtor was not entitled first to commit a statutory default and then to take the benefit of it to the effect of annulling all the procedure that had taken place in the case.

The respondent argued that he had not failed to appear in “obedience to a citation,” and therefore the condition on which decree of cessio could be granted in his absence did not exist. The decree of 19th June was therefore erroneous.

At advising—

Judgment:

Lord President—This is an application for cessio at the instance of the debtor himself, and upon the 23rd May 1884 the Sheriff-Substitute granted the usual warrant appointing the petitioner to publish a notice in the Gazette, and requiring the creditors to appear, and the bankrupt himself to appear, and to lodge a state of his affairs. The date of compearance was the 19th of June following, and as the debtor did not then appear, what the Sheriff-Substitute did is embodied in the first part of his interlocutor of that date:—“The debtor having failed to appear in obedience to the order of Court of date 23rd May last, at a meeting held this day, and the Sheriff being satisfied that such failure is wilful, on the application of all the compearing creditors, and on their motion, decerns the debtor Thomas Smith to execute a disposition omnium bonorum to and in favour of Alexander Sturrock, Solicitor, Jedburgh, who is hereby appointed trustee for behoof of the creditors of said debtor.” Now, this interlocutor was pronounced, I apprehend, in terms of sec. 9 of the Bankruptcy and Cessio (Scotland) Act 1881, which is in these terms—“If the debtor fail to appear in obedience to the citation under a process of cessio bonorum at any meeting to which he has been cited, and if the Sheriff shall be satisfied that such failure is wilful, he may, in the debtor's absence, pronounce decree of cessio bonorum.” But the Act of 1881 was passed to amend the previous Act of 1880. The Act of 1880 provides for a process of cessio being brought either by a debtor or by any of his creditors, and therefore every section of the amending Act which is not limited in its operation to one of these two classes of cessio must be held to apply to both, and this 9th section from the generality of its language plainly does apply to both, that is to say, it applies to a cessio at the instance of a creditor, and it also applies to a cessio at the instance of a debtor. Now, in a cessio at the instance of a debtor himself it is argued that there is no such thing as a citation of a debtor; undoubtedly the language might have been better selected, but I think that the intention of the Legislature is quite apparent, and that the order to appear upon the day appointed for the compearance of the creditors was to be an equivalent for formal citation of the debtor. If it were otherwise, then this section would apply only to cessio when pursued by a creditor. As the matter stands under section 9 of the Act of 1881, I am perfectly satisfied that the intention of the Legislature was that wilful failure to appear should be attended by the same consequences

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whether the petition for cessio was presented by the debtor or by his creditors. I therefore think that the interlocutor pronounced by the Sheriff-Substitute upon the 19th June was. the proper interlocutor in the circumstances, while that of the 24th June followed as a matter of course. The Sheriff on the other hand seems to have been led into an error through not attending to the provisions of the Act of 1881. I think, therefore, that we should recall the interlocutor of the Sheriff, and affirm the two interlocutors of the Sheriff-Substitute.

Lord Mure concurred.

Lord Shand—In no view of the case does it appear to me to be possible that the Sheriff's interlocutor can be sustained. The provisions of the 9th section are clearly in favour of the rights of creditors, and the Sheriff is authorised to pronounce a decree of cessio if he believes that the debtor's failure to appear is wilful. In the present case the bankrupt committed what the Sheriff-Substitute believed to be a wilful default, and he now asks that he is to derive a benefit from this wilful default. The creditors met, and litiscontestation ensued, and I think that they are entitled to keep the proceedings in Court, and that the debtor is not entitled to have his petition dismissed through a failure on his part to comply with the provisions of the statute. I think also that the Sheriff-Substitute was right in his interpretation of section 9 of the Act of 1881, and that in the case of a petitioning debtor citation in the literal sense of the word is not necessary.

The Court recalled the interlocutor of the Sheriff, and affirmed the two interlocutors of the Sheriff-Substitute, and authorised the trustee to pay the appellant's expenses as taxed.

Counsel:

Counsel for Appellant (Marquis of Lothian)— Graham Murray— Baxter. Agent— P. Morison, S.S.C.

Counsel for Respondent (Smith) — Campbell Smith. Agent— David Hunter, S.S.C.
1884