Scottish Court of Session Decisions

The Glengarnock Iron Company were, and for many years prior to 1886 had been, the tenants of two adjoining mineral fields in the county of Renfrew, known as the “Douglas Field” and the “Abercorn Field” respectively, which had always been wrought together as one mineral field. The Walkinshaw Oil Company (Limited) was sub-tenant under the Glengarnock Iron Company of the fields, the latest sub-lease being dated July 1883.

During the currency of a previous sub-lease the Walkinshaw Oil Company, sub-lessees, had purchased from the Glengarnock Iron Company part of the plant, &c., upon the subjects, at the price of £7000. Afterwards they purchased the remainder of the plant, &c., at the price of £15,250, and in part payment thereof granted two bills for £5250 and £5500 respectively, of which the former fell due on 17th July 1886, and the latter on 21st July 1886. On 14th August 1885 the sub-lessees had given notice of their intention to exercise their option to terminate their sub-leases. By minute of agreement between the Glengarnook Iron Company and the Walkinshaw Oil Company Limited, dated 14th May 1886, the Glengarnock Company agreed to purchase fromtheWalkinshawCompany, as at 26th May 1886, “all the plant of every description upon and connected with the sub-lease of the subjects embraced in the Douglas lease, and that at the valuation to be placed thereon” by the valuators thereinafter appointed. It was further agreed that the price of the said plant should be applied pro tanto in payment of the sums due by the Walkinshaw Oil Company, Limited, under current acceptances. In the course of the valuation, however, the parties differed as to the extent of the plant described by the words “upon and connected with the subjects in the Douglas lease.” They agreed in holding as falling within this description plant valued at £8913, 3s. 10d. The items which according to the contention of the Walkinshaw Oil Company did, and according to the contention of the Glengarnock Iron Company did not, fall within this description were valued at £9443, 6s. 1d.

On 9th October 1886, while negotiations were pending for the adjustment of these differences, John Charles Cuninghame and others, the partners who were carrying on business under the name of the Glengarnock Iron Company, presented a petition under the Companies Acts 1862, 1867, and 1886, for the purpose of having the Walkinshaw Oil Company, Limited, wound-up under those statutes. They averred that they were creditors of the latter company to the extent of £1836, 16s. 2d., i.e., the difference between £10,750, the amount of the two bills above mentioned, which had not been paid, and £8953, 3s. 10d., the value of the plant which they admitted to fall within the terms of the agreement of 14th May 1886, and for which they were ready to give credit; that they had served a notice on the company on 3d September 1886, and that as three weeks had elapsed since the service of the notice without payment having been made, the company was unable to pay its debts, and the present application should therefore be granted.

On the 18th October 1886 answers were lodged for the Walkinshaw Oil Company, Limited. In these answers liability upon the two bills was admitted, but they maintained that the plant, about which the parties were not agreed whether it fell within the description, did really fall within the description, and had been purchased by the petitioners. As it was worth £9443 as valued, they claimed that the balance was truly in their favour. Alternatively, they maintained that as the petitioners had entered on possession of the whole plant they were, in any view, bound to pay its fair value, which even at break-up prices would exceed the £1836 in respect of which the petition was brought. They stated that the petition was really brought to concuss them, under threat of a liquidation, to give up their contention as to what fell within the description of plant sold.

Argued for the petitioners—The company was unable to pay its debts in the sense of the statute, and therefore a winding-up order should be pronounced—25 and 26 Vict. c. 89, sec. 80;

Page: 67↓

in re Globe New Patent Iron and Steel Company, June 26, 1875, L.R., 20 Eq. 337.

Argued for the respondents—The creditor was not entitled to a winding-up order, for the debtor bona fide disputed the debt, and there was no evidence of insolvency other than non-compliance with the notice served under the Companies Act. Not only was the debtor not insolvent, but he was possessed of property far in excess of the debt, and there was no averment of the existence of any other creditors— In re London and Paris Banking Corporation, Nov. 21, 1874, L.R., 19 Eq. 444; in re The Catholic Publishing Company, Limited, March 7, 1864, 33 L.J. Ch. 325.

It appeared from admissions at the bar that on other transactions altogether, as to which there was a current-account between the petitioners and respondents, the petitioners owed the respondents a sum which at the date of the discussion amounted to £1200. The respondents, on the suggestion of the Court, offered to consign the £600, which was the difference between this sum and the £1800 in respect of which the petition was brought, the Court intimating that such consignation would receive consideration on the question of expenses.

At advising—