Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> M'Kinnon, Petitioner [1884] ScotLR 22_144 (26 November 1884)
URL: http://www.bailii.org/scot/cases/ScotCS/1884/22SLR0144.html
Cite as: [1884] SLR 22_144, [1884] ScotLR 22_144

[New search] [Printable PDF version] [Help]

SCOTTISH_SLR_Court_of_Session

Page: 144↓

Court of Session Inner House First Division.

Wednesday, November 26. 1884.

Lord Kinnear, Ordinary.

22 SLR 144

M'Kinnon, Petitioner.

(Ante, vol. xxi., p. 476.)

Subject_1Judicial Factor
Subject_2Cautioner
Subject_3Public Company
Subject_4Company incorporated by Act of Parliament.
Facts:

A judicial factor proposed as cautioner a public company registered with limited liability under the Companies Acts, and carrying on guarantee business. The Accountant of Court had some months previously reported that the company was in a good financial position, and it was stated that there was no material alteration in its position. Held (following M'Kinnon, March 8, 1884, 21 Scot. Law Rep. 476, 11 R. 676) that the company might be accepted as cautioner.

Observed (1) that in all future applications of this kind the Clerk of Court would require to satisfy himself that the financial position of the company was satisfactory; (2) that only the bonds of associations subject to the jurisdiction of the Court of Session would be accepted.

Headnote:

Lauchlan M'Kinnon jun., advocate, Aberdeen, was on September 9, 1884, appointed judicial factor upon the trust-estate of the deceased George Alexander Grainger, of Aberdeen, with the usual powers, he finding caution before extract. He presented this petition praying that the caution to be found by him might be restricted to £5000, or such other sum as the Court should fix, and that a bond of the National Guarantee and Suretyship Association (Limited) should be accepted instead of a bond of caution by a private individual.

The petitioner alleged that he was un willing, on account of the largeness of the estate, to apply to any of his private friends to be cautioners for him in the factory. The value of the estate was £35,385, and the annual income £1210, and the petitioner submitted that the amount of the bond of caution offered by him (£5000) being more than five times the income of the estate, and a larger sum than was ever likely to be in his hands, would form a proper limit to the caution to be found.

The Lord Ordinary ( Lord Kinnear) reported the petition to the First Division.

Argued for the petitioner—The question of the expediency of granting an application of this kind had been before the Court in the recent case of Kinnon, March 8, 1884, 21 Scot. Law Rep., 476, 11 R. 676, when the same petitioner, as curator bonis on the estate of Alexander Adam, received the sanction of the Court to substitute a bond of the same association for a bond of caution by a private individual. The only difference between that case and the present was that the accounts of a curator bonis were annually audited by the Accountant of Court, while in the case of a judicial factor there was not the same protection to the estate. The association provided an auditor for its own interests in the case of judicial factors, and charged an extra premium. The standing of the association had been fully inquired into in the previous case, and there was no material alteration in its position since then.

Authorities— Burnet, July 6, 1859, 31 Jurist, 637; Keating, 24 D, 1266.

The petitioner, upon the suggestion of the Court, increased his offer of caution to £7500.

At advising—

Judgment:

Lord Mure—The question raised by this application is one of very general importance, and is substantially the same point which we previously decided on 8th March of this year, and in which the same association was accepted by this Court as cautioner for the sum of £10,000. While the value of the estate in that case was about £72,000, it is stated in the application now before us that its value is estimated to be £35,000. There was this further difference between the earlier case and that now before us that in it the application was one by a curator bonis who supported his claim by the provisions of sec. 27 of the Pupils Protection Act, while in the present case it is as judicial factor that the application is made, in which circumstances

Page: 145↓

the accounts are not under the annual audit of the Accountant of Court.

From the opinions delivered by the Court in the previous case it appears that we all considered that we had the right at common law, and without the intervention of any Act of Parliament, to deal with the question of caution, both as to its nature and amount.

I think, following that decision, that we are entitled to do the same here, and indeed the only question of importance relates to the amount of caution which ought to be accepted. There is not in the present case, as I have already observed, the annual official audit which takes place in the case of a curator bonis, and accordingly I think that the sum of £5000 named in the petition is too small, but that the amount offered at the bar, viz., £7500, meets the necessities of the case. With this alteration I am for granting the prayer of the petition. This same association had as lately as March last the approval of the Accountant of Court, who in his report described it as a well-conducted association, and one which in his opinion might well be allowed to stand in place of a private cautioner. In future applications of this kind the Clerk of Court will of course satisfy himself that the association continues to maintain a good financial position.

Lord Shand—This application is the natural sequel of the case which we had before us in March last, in which we decided that we were entitled not only to limit the amount of caution, but also to accept the bond of an association of this kind in room of a private cautioner. There will not in the present case be any official audit of accounts, but that does not to my mind affect the question. I think that as far as the interests of the estate are concerned it is much better that it should have an association of this kind in good repute as cautioner than any private individual. I think also that the sum now offered by the Guarantee Association as caution is sufficient, especially as we are informed that the position of this association is substantially what it was when reported upon by the Accountant of Court in March last. I agree with what your Lordship said, that in any future application of this kind the then financial position of the company will require to be considered by the Clerk of Court.

Lord Adam—I concur, and only desire to add that in accepting bonds of caution by associations of this kind I think it is essential that they should be Scottish companies, or at any rate companies under the jurisdiction of this Court.

Lord Mure—I concur in this.

Lord Shand—I am of the same opinion, and omitted to refer to that point in my opinion.

The Lord President was absent.

Lord Deas was absent.

The Court granted the prayer of the petition, the amount of caution to be found being fixed at £7500.

Counsel:

Counsel for Petitioner— Mackintosh— Begg. Agents— Morton, Neilson, & Smart, W.S.
1884