Scottish Court of Session Decisions

John Masterton, civil engineer, Edinburgh, died there on the 9th October 1886, intestate, leaving a widow but no family.

Upon the 18th October 1886 a petition was presented, under section 164 of the Bankruptcy (Scotland) Act 1856, by certain heritable creditors, with the consent and concurrence of the widow, Mrs Jane Field or Masterton, praying for the appointment of a judicial factor upon the estate of the deceased, which consisted, so far as the petitioners were aware, of the following:—£1000 of Anglo—American Telegraph Stock, £500 Great Eastern Railway Ordinary Stock, ten shares in the North British and Mercantile Insurance Company, certain heritable subjects in Bonnington Road, Bangor Road, and Breadalbane Street, Leith, an interest (amount unknown to the petitioners) in the Craiglockhart Estate Company, and in heritable property belonging to a building syndicate in Dundee.

The nearest-of-kin of the deceased were his two brothers, James Masterton and William Masterton, both resident in Philadelphia, United States of America.

Upon 6th November 1886 the Lord Ordinary appointed Mr Ebenezer Erskine Scott judicial factor upon the said estate.

Upon 2nd December 1886 a petition was presented by the said William Masterton and others, praying for the recal of Mr Scott's appointment as factor foresaid.

The petitioner William Masterton averred that as soon as he heard of his brother's death he authorised a mandatory to act for him in relation to his deceased brother's estate, and that upon 19th November 1886 he was appointed executor—dative qua next-of-kin of the said John Masterton. He also alleged that he had returned to this country and was ready to perform his duties as executor; that the petitioners were the whole parties (except the widow of the deceased) who were entitled to succeed to his estate; that after

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deducting the heritable debts of the petitioners there was a free margin of from £3000 to £4000, with a free yearly income of from £250 to £300; that as there were no pressing claims on the estate the appointment of a judicial factor was no longer necessary, and its continuance occasioned the estate unnecessary expense.

Answers to the petition were lodged by the Rev. John Erskine and others, the heritable creditors and petitioners in the petition under which the factor was appointed. They objected to the recal on the grounds that the factor had been duly and competently appointed, and that it was not until he had entered upon the duties of his office that proceedings were commenced by the petitioner William Masterton in the Commissary Court of Edinburgh. The respondents further objected to the legal diligence which they had competently used being superseded, especially as there was no proposal to pay their debt. They denied the valuations submitted by the petitioners, and alleged that the properties taken at fifteen years' purchase of their present rental would hardly meet the debts of the heritable creditors, while in addition the property was burdened with the widow's terce. They stated that the moveable property was to a large extent hypothecated to the Clydesdale Bank, and that debts had been intimated to the extent of £500. The respondents further averred that the estate was practically insolvent.

By interlocutor of 25th January 1887 the Lord Ordinary recalled Mr Scott's appointment as judicial factor on John Masterton's estate.

“ Opinion.—It is objected by the respondents that the present application is incompetent before me, and should have been presented in the Inner House as the only Court competent to deal with the recal of a factory. The Act 20 and 21 Vict. cap. 56, provides (sec. 4) that ‘all summary petitions and applications to the Lords of Council and Session, which are not incident to actions and causes actually depending at the time of presenting the same, shall be brought before the Junior Lord Ordinary officiating in the Outer House, who shall deal therewith and dispose thereof as to him shall seem just,' and in particular all petitions and applications of the kind described in the Act. For some time the practice of the Court to some extent proceeded upon a construction of that Act which limited the power of the Junior Lord Ordinary to deal with the cases falling within those specially enumerated in the Act. But a broader construction has since been adopted, as an illustration of which reference may be made to the case of Tweedie, 24 S.L.R. 155. As a summary petition not incident to an action or cause presently depending in Court, I think I can competently deal with the present application, and therefore I repel the objection stated.

“On the merits of the application I entertain no difficulty. The petition for the appointment of a factor set forth, inter alia, that Mr Masterton died intestate, that there was no one interested in his estate then resident in Scotland to manage or administer that estate, and that certain rents had to be uplifted and disbursements made, or otherwise the estate might suffer injury. In this state of circumstances it was obviously for the advantage of all concerned that a factor should be appointed, and such an appointment was

accordingly made. Since then the circumstances have materially changed. The heir-at-law and the executor of Mr Masterton have both come to this country, and are now ready to undertake the duty of administering and managing the estate for behoof of all concerned. The continuance of the factory is therefore no longer necessary, nor is it expedient to burden the estate with the expenses of a factory which is unnecessary. The respondents' claims on the estate of Mr Masterton can suffer no damage by the recal of the factory. So far as these claims affect directly the heritable estate they cannot suffer, because the heritable estate will remain subject to these claims just the same whether there is a factor or not. If the respondents wish to call up their debt they can do so; that remedy is always in their own hands. As regards the moveable estate and the claims upon it the executor will have to account for all the estate he can recover, and will besides, on confirmation, be required to find caution for his intromissions.

“I therefore recal the appointment of factor, an appointment which I would probably not have made had Mr Masterton's executor been in this country, and willing to administer at the date when the petition for appointment was presented.

“I shall allow the expenses of both parties to be paid out of the estate.”

The Rev. John Erskine and others reclaimed against this interlocutor.

On 26th February 1887 William Masterton and others presented a note to the First Division submitting a statement and giving their view of the estate of the deceased. They alleged that there was free moveable estate to the extent of £1763, and free heritage to the value of £1734, together amounting to £3497, and that to say that the estate was practically insolvent was entirely inaccurate and misleading.

By interlocutor of 2d March 1887 the First Division remitted to the Accountant in Bankruptcy to inquire into the condition of the intestate estate, and to report.

In his report dated 16th March 1887 the Accountant estimated the value of the moveable estate of the deceased at £1045. He set down the book debts at something less than £500, and he expressed an opinion, after a careful examination of the heritable estate, that he was not in a position to say whether, if exposed for sale, it would realise enough to pay off the bonds in full.

The Bankruptcy (Scotland) Act 1856 (19 and 20 Vict. cap. 79), sec. 164, provides—“It shall be competent to one or more creditors of parties deceased to the amount of one hundred pounds … in the event of the deceased having left no settlement appointing trustees or other parties having power to manage his estate … to apply by summary petition to either Division of the Court for the appointment of a judicial factor, and … the Court may appoint such factor, subject to such conditions as to caution, and such other conditions, as the Court may provide by Act of Sederunt.”

Argued for the reclaimers—The appointment of a judicial factor under section 164 of the Bankruptcy Act was what in the circumstances the reclaimers were entitled to; the estate was in a oritical condition, and it being uncertain whether it was insolvent or not, it was for the interests of

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all concerned that it should be managed by a neutral party. The reclaimers had shown the Court sufficient in the report of the Accountant to warrant the continuance of Mr Scott's appointment— Alexander, July 15, 1862, 24 D. 1334.

Replied for the respondents—The question of the appointment of a judicial factor in circumstances like the present was one entirely for the discretion of the Court. The original application was made on the ground of emergency, but as those who ex lege were entitled to act had now appeared, and were anxious to administer the estate, the interlocutor of the Lord Ordinary recalling the factory should be adhered to Macfarlane and Others, March 6, 1857, 19 D. 656. The estate would be more economically worked by the respondents than by a judicial factor.

The objection to the competency of presenting the petition to the Junior Lord Ordinary was renewed in the Inner House, but was not insisted in.

At advising—