Scottish Court of Session Decisions

John Fraser Ross, 12 Hope Street, Edinburgh, presented a petition in the Sheriff Court at Edinburgh praying to have it found that he was entitled to the benefit of the process of cessio bonorum, that decree should be granted accordingly, and that a trustee should be appointed to manage and dispose of his estate for behoof of his creditors, under the Act 6 and 7 Will. IV. cap. 56, the Sheriff Courts (Scotland) Act 1876, the Debtors (Scotland) Act 1880, and the Bankruptcy and Cessio (Scotland) Act 1882.

The petitioner averred that he was insolvent, and ready to surrender his whole means for his creditors; that upon 22d September 1885 he had received a duly executed charge for payment of £23, 2s. upon an extract-decree from the Sheriff Court of the Lothians and Peebles at the instance of Mrs Mary Rhind or Elston, one of the creditors called as defenders to the present action; that the days of charge had expired without payment of this debt; and that the petitioner was notour bankrupt under the Debtors (Scotland) Act 1880.

James M'Whir Hairstens, writer, Dumfries, one of the persons called as creditors, objected to the petition being granted, on the grounds, inter alia, that the debt under which notour bankruptcy was alleged to have been constituted was that admittedly of a half aunt to the petitioner, was not bona fide contracted, and had admittedly for its object the obtaining of a discharge from his liabilities, the debtor having previously granted a trust-deed for behoof of his creditors while he was carrying on business in Aberdeen; that as the debtor had acknowledged in his state of affairs that he had no estate, decree of cessio was incompetent, and that the whole proceedings were very suspicious. To which objections the petitioner replied that the debt to Mrs Elston was bona fide contracted for board, lodgings, and money lent, and that it was honestly due.

It appeared that the petitioner had in October 1883 granted a trust for creditors in favour of certain trustees, one of whom was Mr Hairstens. The estate was realised by these trustees, and divided among the creditors, with the exception of Mr Hairstens, who refused to accept a dividend. Mr Hairstens was agent for creditors who held securities over the petitioner's heritable property, which was insufficient, and they therefore ranked for the deficiency, but with regard to his personal claim Mr Hairstens intimated immediately before the payment of the dividend that he refused to rank. It also appeared that in April 1885 the petitioner had presented a petition for cessio in the Sheriff Court at Aberdeen, which had been objected to by Hairstens and been refused.

Upon 29th October 1885 the Sheriff-Substitute ( Hamilton) pronounced the following interlocutor—“The Sheriff-Substitute having resumed consideration of the foregoing petition and productions, together with the note of objections and answers thereto, and having heard parties' procurators, Dismisses the petition: Finds the opposing creditor Mr Hairstens entitled to £2, 2s. sterling of modified expenses, and decerns for payment to the said Mr Hairstens or his agent.

“ Note.—The Sheriff-Substitute is satisfied that the pursuer has presented this application, not for a legitimate purpose, but with the view of getting rid of Mr Hairstens' debt, which it is plain still subsists, Mr Hairstens having refused to accede to the trust-deed mentioned in the proceedings.”

The pursuer appealed to the Court of Session, and argued—No doubt there was, as stated in the application, no estate to divide, but it was no objection to the application for the benefit of cessio that there was no estate to divide when there was notour bankruptcy—See Act of Sederunt anent cessios, 22d December 1882. If in former times sequestration could be obtained although there was no estate, it followed that a cessio could now be obtained in this case. Indeed, it followed a fortiori, seeing that this was just sequestration applicable to small estates. The respondent could not well resist the application, as it was he who had divested the petitioner of his whole estate. His sole object was to secure a preference for his debt, and to keep it up against the debtor.

Authority— Gardiner v. Woodside, June 24, 1862, 24 D. 1135.

Replied for the respondent—The application should be refused; it was an abuse of the process of cessio. The respondent while acting as trustee specially reserved his private claims. The process of cessio was now one of distribution, and in the absence of any funds in the present case it was impossible that it could be worked out—Debtors Act 1880 (43 and 44 Vict. cap. 34); Sheriff Court Act 1876 (39 and 40 Vict. cap. 70), sec. 26, sub-sec. 3.